European Union History PDF

birleştirilmiş W1.2 … Directives, which they can give like the government does this or that, okay? We cannot send police if the government misbehaves. The only possibility is member states respect that because they want to respect the law. Something which makes us lawyers a little bit more humble...

birleştirilmiş W1.2 … Directives, which they can give like the government does this or that, okay? We cannot send police if the government misbehaves. The only possibility is member states respect that because they want to respect the law. Something which makes us lawyers a little bit more humble because law is only law because we respect it. Somebody is respecting, and it can flip very quickly, okay? If the government changes and they say we don't respect the law anymore, just think what happened in 1933 in Germany, law is not that important anymore, so then things can flip very quickly. The rule of law is very, very important. And then another point I have here on my slides, the principle of non- discrimination as a very general principle. We want to have that. That is not only in the free movements. It's a general principle, which is now in Article 18 of the EU. There should be no discrimination because of nationality. Every person in the EU should be treated equally. And then we have independent, autonomous institutions. You'll see when we talk about the commission, I think Roland will do that. Roland Clark is with you. He will tell you that the commission is composed of persons who are not representatives of the government. They are absolutely, and have to be, absolutely independent. And we say, well, Mrs. von der Leyen is the German president of the commission. That is just not, she's German, but that she is German doesn’t, should not, must not play any role, okay? She is an independent, autonomous person and she has to be independent of any kind of directives from the German government. She does not, it’s not allowed to take directives from the German government. That’s why Mrs. von der Leyen, she is a German national, but she’s not a German commissioner. We do send one person from every member state to the commission, but they have to be independent. They have to be autonomous. The council is a bit different because the council represents the member states. They are, and it’s mentioned that the council represents the member states. We’ll come to that later. Yeah, and what I told you, that’s the last point of this slide, is the political end in view was we created one market, but we want—and we hadn’t wanted to, and that was in the treaty at the very beginning. From 1958, we want to have a political means. The idea is to put, to enhance, to develop a German—sorry, develop a European society. That is the end of everything. You could say so, first the merchant, then the diplomat, and then political development. Like I told you with the asylum law, okay, that brings memberships together. It might not work at the end, but that was the idea in 1938. So the next slides, maybe we don't even have to talk about that a lot because we developed that already. Okay, law was designed to be the main instrument of integration, and that’s—I told you weak institutional settings and powers, no political integration, but integration by law. Let’s see if I can skip that because we talked about everything here already. And yeah, maybe we can look at the objectives of the European Economic Community. You have to download the slides, probably to see the rest of the points, but we talked about that already. So the objectives of the European Economic Community from the very beginning were to have achieved a general objective. There was nothing about competition. There was a general objective. It was creating sustainable, harmonious, balanced development of economic activities. It was a bit more complicated, but you can find the old Article 2 if you Google TEC 1958. You can find that—look at Article 2, that was the main objective. Okay, it was economic, but not only economic, but also social, free, equal treatment of women and men. That was one thing that was also in the general objectives. Ah, by the way, one example I really like is we talk about social—let’s say I say that in English. When you catch fish, you not only catch the big fish, you also catch small fish. We call it *Beifang* in German. As an Irish person, you all do a lot of fishing, Irish. So you also catch the small fish. One of the small fishes is the free, equal treatment of women concerning equal pay in labor. Okay. I don’t know how it is in Indonesia, for example—are women paid the same as men for the same work? Not really. In China? No. By law? It’s a global problem. In European integration in 1958, there was a rule, it was Article 118 TEEC, the Treaty on the European Economic Community, which said male and female must be paid equally for work. In 1958, that was a time when in Germany, women were not allowed to work without the consent of their husband if they were married. If they were not married, they could work. If they were married, that was a law until 1974 in Germany, okay? But when they were paid, they had to be paid equally. Of course, it was not enforced correctly, and still is not. We don’t really know. Okay. Courts are getting very sensitive to this aspect. We don’t want to talk too much about European labor law. But why do you think that rule was introduced in 1958, when in Germany, females were not even allowed to work without the consent of their husbands? Wouldn’t Germany say, well, that’s ridiculous, paying females the same as men? Okay, now of course we know that at that time, what member state already had the rule that females were to be paid the same as men? Of course, France. Why do you know that? Do you have a response? Thank you. What was the argument of the French government when they were negotiating the treaty agreement, the TEC? When the TEC was negotiated, the French said, well, we want to have this rule in the treaty. Same thing for females. Why do we want to use that when we are French? You think the influx of females was not foreseen? An influx of female workers to France would be an idea, of course, because they would earn more. But that would have two problems—first, as a German female, you would have to speak French; the second problem was nobody did that; third problem was, so I don’t think that was an issue. Could be a bycatch (*Beifang*). Bycatch in English. So if you are a textile company, and a lot of females in France and Germany were working in the textile industry, and you are a French textile company, what do you think would be your problem with that kind of rule in your member state? Females have to be paid the same as male workers. You pay the workers more than the German female workers, because of course, at best, this means at the end female wages will be higher, because they will more or less adapt to the male wages. The male wages will not go down to the female wages. That means you have to pay more to your female workers in the textile industry, which means what for your textile companies? Competition between companies, however. So, the French, there is a political issue as well. They said, well, this will put our textile industry under pressure. So you see, opening the markets—when we go back to here, as we said before, creating a European market will at the end have a lot of secondary effects on society as well. And this one was one from the beginning, already equal treatment or equal pay for females and males. Just because we want to have, we open up the markets, means we have to have some kind of harmonization also on these social issues. Exactly this is the reason why we have a lot of labor law today. Labor law is a huge cost factor. Working times, for example, or holidays for workers. There’s a European Union rule which says how long the holiday of a worker has to be—at least four weeks. It’s a huge cost factor, and all of the EU is harmonized. Labor law is greatly harmonized in the European Union. So, these political issues— harmonized sustainable development, economic activities, and so on—are realized by creating the common market. It was called common market in 1957, named, of course, 1958. Now it’s called internal or single market, changed with the so-called Single European Act in 1987. Now we have also an economic monetary union which was put into force in 1993. You have the euro. Since when do you know the euro was introduced? Most people don’t know actually. The first banknotes were issued, coins and banknotes as a means to pay were introduced in 2002, January 1st, 2002. But the euro was introduced before already, in 1999 as a currency. Just the banknotes were only placed in 2002. But the euro actually replaced the national currencies in 1999 already. We paid with a Deutsche Mark bill, but the Deutsche Mark bill was legally a euro. Most people don’t know. Okay, so that was the economic community of the Union. And then we have all these implementing policies and activities referred to in Articles 3 and 4, TEC or TEC. We’ll talk about the notions later, and which is, for example, harmonization competition policy, principles of open market, and free competition. Again, the common market is free movement of goods and competition law. We have this kind of monetary union, economic union, and we have common policies. That’s how the European Economic Community Treaty, or the European Community Treaty, worked. Now in 2009, things changed a little bit and the EU treaty was reformed. The European Union was introduced as a legal body. This was the Lisbon Treaty. Since then, we have general objectives in Article 3 TEU. You could look that up on your phone or on your iPad or whatsoever. Have a little look into Article 3 TEU. Don’t do it now. Just there are basic objectives: peace, values, well-being of its people. And there are instrumental objectives. How do we achieve these basic objectives? It is now the area of freedom, security, justice, and internal market, which used to be the common market, economic and monetary union, external actions. Now, these are the objectives of the Treaty on the European Union. And now I would like to talk about the supranational character of the European Economic Community. What we were already talking about on Monday was that the European Union is not a state. It’s no federal state because there’s no European people, there’s no European power actually, really. There’s a transfer of power. It’s not a classical international organization either, because it has so many additional features. We could define it as a transnational, federal-like polity tied to specific objectives and ruled by a civic legal order. That’s a very legal point of view, okay, definition, but never mind that, it doesn’t matter. You don’t have to remember this definition. Important is the supranational character of the EU. That’s just the important point. And the elements of supranationality are what? One element would be direct effect. What does direct effect mean? Well, as lawyers, direct effect is totally normal. What does that mean, direct effect? Exactly. So you can invoke or rely on EU law directly before a national court. I mean, if you have a lawsuit and let’s say Mr. V has a problem with tariffs, and he’s claiming that these tariffs are void against member states, let’s say in the Netherlands. Then direct effect would mean he could invoke the EU provision, he could invoke that before the national court. The national court would then apply EU law. That is what direct effect means. And when you remember last Monday, when we talked about WTO law, the law of international organizations, that’s not the way our international organizations work. They work like you go to your government, complain, and then the government will apply or go to a dispute resolution or enter into negotiations. By the way, the first stage of any kind of dispute settlement under the WTO is negotiation. You go to another member state, the other state—Beijing goes to Brussels and says, what you’re doing is violating WTO law. Let’s discuss that. They will negotiate. And only then will it go into the more legal procedures. And even if you do go on legal procedures, there is no possibility for the dispute settlement body to say, that’s void, what Brussels did. They can only say, China, you are allowed to retaliate. That’s very different. Under EU law, as we will see, supranational character, elements are direct effect of EU law. Supremacy would mean, well, then Brussels, or in this case, the rules of the member state N, Netherlands, are not applicable. That would be direct effect and rule of supremacy of law. EU law would have primacy over national law. Now let’s go to the Van Gend en Loos case. You might have already had a look into it. And that’s a very important step in the development of European Union law. We have that here on the slides. I’ll skip a little bit. I hope you’re not disappointed if I skip slides. I want to keep time a little bit, and sometimes I’ve already explained things, and I don’t want to duplicate everything. This is direct effect, exactly what you said. This is the capacity or provision you are allowed to invoke before a national court. That was you, exactly. These rules can confer rights to individuals—that can be the case, must not always be the case—if they confer rights on persons. That would mean you have a subjective right to enforce the free movement of goods before a national court. And possibly, the procedure could also go to the European Court of Justice, and the European Court of Justice would give an answer. Whereas normal international law would have no direct effect. So this was the case: Van Gend en Loos, a Dutch company, wanted to import a specific chemical into the Netherlands. The chemical was produced in Germany and should be imported to the Netherlands. The Netherlands had introduced a tariff—well, let’s say rather, an enhanced tariff. They had a tariff before already, now they put it up. I told you, during the transitional period, tariffs were allowed, but they were not to be changed. Okay, that was 1961 or 62 when the case happened. Around about 1960. I actually don’t know whether when the vehicle was imported. So Van Gend en Loos had a smart attorney, a smart law firm. They said, let’s go to Dutch court, national court, and invoke Article 12 TEC, which is the right not to be put on new tariffs. Okay. So let’s think about we are in the year, sorry, 1963. Or the hearing was 1962, four years after the treaty was put into force. What would the Dutch government say if you represent the Dutch government? When will we go to the Court of Justice to visit the hearing? As you will see, it looks like it was from the very beginning. There will be, in any case, every member state’s possibility to plead. And here the Dutch government came and said, “We plead for what?” EU law has no—the European Court of Justice, well, the national court has no jurisdiction, you could say. There is Dutch law as supremacy. And when you think about what we talked about before—international law, international organizations—would be the primary argument if you want to argue. This is a ridiculous, absolutely ridiculous procedure. There’s a private person going to a national court invoking international law. This is unheard of. Why? There’s no direct effect. This is international law. I had a little element here before. We look at this so-called dualistic approach. There are some member states which have a so-called monistic approach, which means international law is incorporated automatically. But let’s keep that out. Most member states have a dualistic approach, meaning you have to transpose international law into national law, and only then is national law directly applicable. Okay, if you have national law, which is different from international law, then of course you apply national law. This is the case in the Netherlands as well because the next posterior rule applies and so on. To keep it simple here, just to say, international law has no direct effect because the European Economic Community is an international organization, okay? So that’s what they plead. Is that right? Plead? Yeah, plead. And then the German government came, and they said every member state can go to the court and plead as well. And the German government said, well, what our Dutch colleagues said is totally right. The Italian government or the Belgian government said what their Dutch colleagues said is absolutely right. We did not want to have direct effects. What we wanted to have is an international organization. Now let’s find out what the court said in response. Here it’s nice if you look into the decision. I have it here on my iPad, and those of you who are just listening here, you can look up the decision very easily. If you Google the number— actually, the number of the case is easy to remember, 26/62. Case 26 of the year 62. Okay, I’ll write that here on the board as well. And you can also introduce in Google "Van Gend en Loos," and you’ll find the case in Google. Looking it up through Google is the easiest way, actually. We always have the numbers. Each case has the number C-26/62. You can add "European Court of Justice" or "ECJ" or "CJEU" (Court of Justice of the European Union), and Google will find it. In case 26/62, it’s an old PDF. You can upload that on Lias as well, so those of you who have access, and if you don’t, I think you have access now—very good. You can find it there. I did some markings as well in the case. We already go on to page number 11, actually, on the substance of the case. That’s really interesting. Did anybody read the case possibly and find what the court said? Does anyone remember what the court said? No? Not yet. So reading the case—you must read the Van Gend en Loos case. You must not read it today, but at some point, you have to read it because everybody has to know the Van Gend en Loos case. It’s on Elias. Yeah, I put it on Elias as well. Elias, yeah, so you’ll find it in week one, you’ll find the case. I will upload some cases. I know studying is not always about work, it’s also about party and society, but anyway, you are master’s students, so you have to do some reading, and it’s good invested time, I think. These cases are really the most central cases that you... When it was in 2013, the court did a huge celebration of the 50 years of the Van Gend en Loos case, which was really one of the main cornerstones of the case law of the European Court of Justice. So when you read that, you’ll find on page 11 and 12, it goes on and on, several arguments. The court put into its mind that of course, this is an international organization. But it also argued differently. At some point, the court started to argue from the objectives of the member states. The court set the tone to argue from the objectives, and this is the way the court since then interprets EU law. It comes more from the objectives and less from the wording, and especially almost not at all, you could say, from the objectives of the lawmakers. Here, the objectives of the member states, which is the contradiction of the very universal agreement of Vienna on international agreements, which says you have to take into account the will of the member states. The court said no, we don’t do that, because the court said the objective of the EEC treaty, which is to establish a common market, the functioning of which is of direct concern to interested parties in the community (it already addresses the interests of the private persons), implies—now that’s important, it’s in green now—that this treaty is more than an agreement, which merely creates mutual obligations between the contracting states. The tone is set in the first sentence, actually, of the reasoning. The agreement addresses the private person's interests, and that is why it is more than an agreement which merely creates conflict. It’s mutual obligations between the contracting states. This view, or it says now it’s reasoning a little bit, is confirmed by the preamble to the treaty, which refers not only to the governments but to the peoples. The reasoning of the preamble, you can read that, is... I don’t know if it’s too much in the preamble still now, in the Treaty on the Functioning of the European Union. I can just read that for a second. It says here in the preamble of the Treaty of the European Union that the parties are determined to lay the foundations of an ever closer union among the peoples of Europe, affirming as the essential objectives of their efforts the constant improvement of the living and working conditions of the people. So they address the people all the time. The idea is this should be an instrument for the people to have better living, and so on. This is what the court says—the preamble addresses or refers to the interests of the people. And then it says, further on, that it is also confirmed more specifically by the establishment of institutions endowed with sovereign rights. I’m not sure if that’s exactly right—the commission has some rights, but sovereign rights? Well, but the court is saying that. The exercise of which affects member states and also their citizens. Rightness, for competition law, but the commission had the right to decide on questions of cartels, for example. There were some more examples. But this is like something you don’t have in normal international organizations. Absolutely not. So this is different. The court is now explaining why the treaty on the European Community is different and is not comparable with normal international law. Then the court says, furthermore, it must be noted that the nationals of the states brought together in the Community are called upon to cooperate in the functioning of this Community through the intermediary of the European Parliament. So there is something like a European Parliament, which also the WTO does not have. Then it refers to the task of the Court of Justice, so it’s its own tasks, under Article 177. This is the preliminary procedure, which is also being applied in this case. And that would be homework for you—to read Article 267, please, and try to understand that procedure a little bit. Then you can understand the argument. You should read it, actually, but I can explain it just now. What happens in this procedure is that the national court, which had to decide on this case, was not sure how to interpret EU law and brought the case to the European Court of Justice. That’s what happens, and that’s called the preliminary procedure because that’s a procedure during the case here, the original case, going to the European Court of Justice to ask a question. This only makes sense, says the court in the sentence, if the Community law (so EU law now) has an authority that can be invoked by the nationals before those courts and tribunals. On this basis, the most important part of the case comes—the conclusion. The conclusion to be drawn from this is that the community constitutes a new legal order of international law for the benefit of which the states have limited their sovereign rights, albeit within limited fields, and the subjects of which comprise not only member states but also their nationals. Okay, that’s something also very different compared to international law—you don’t limit your own sovereign rights. If China infringed WTO law, well, so be it. There’s no effect on the Chinese legal order. It’s just, you infringed WTO law, or the United States, or whatever. That happens all the time. There’s no effect, no direct effect at least—you don’t have to negotiate. But that’s different in the EU, that’s what the court here says. Independently (next sentence) of the legislation of member states, community law therefore not only imposes obligations on individuals, but is also intended to confer upon them rights which become part of their legal heritage. Now this is the next very important point. It means that this is not only objective law, which can be invoked directly before national member state courts, but these laws can also confer rights to private persons, which we need actually in order for private persons to enforce their free movement of goods. This is what the court here says. These rights arise only where they are explicitly granted by the treaty, but also they can be gained by interpretation. The court has set the tone that, well, there is a direct effect, more or less already. Then it can interpret Articles 9 and 12 of the treaty and can explain that this article (next page) contains a clear and unconditional prohibition, which is not a positive but a negative obligation of the member states. That means this is a right for the private persons and produces direct effect in the legal relationship between member states and their subjects (who are private persons). Skipping ahead, then, read the third-to-last paragraph on page 13: it says, "A restriction"—now this is interesting, coming back to competition and effectiveness, like what Mr. Cheng said—"a restriction of the guarantees against the infringement of Article 12 by member states, so if member states could say, well, we don’t mind, okay, we’ve just put up tariffs, and then we go into negotiations" (which is the WTO method), it says if member states could do that, this would remove all direct legal protection of the individual rights of their nationals. There is the risk that recourse to the procedure under these articles would be ineffective. If you say we do it under Article 169 (that’s the international method), member states can go to the court, or the commission would go to the court under an infringement procedure. We also have that, but it’s much more effective. The risk of recourse to the infringement procedure would be ineffective if it were to occur after the implementation of a national decision contrary to the provisions of the treaty. Now comes the nicest paragraph: "The vigilance of individuals concerned to protect their rights amounts to an effective supervision, in addition to the supervision entrusted by Articles 169 and 170 to the diligence of the Commission and the member states." This means that individuals act as an agent of integration. Mr. Van Gend en Loos, going to the national court, helped remove the tariff, and that was good for integration. In 1993, we talked about the case. Mrs. La Rapuola went to a German court and said, "I want to be listed as an attorney." In the original case, the German administration said no, so she went to court. The case went to the European Court of Justice under the preliminary procedure. That’s what you want to read. The European Court of Justice said, well, under certain circumstances, there is a right for Mrs. La Rapuola, and this resulted in every European-trained lawyer having the right to go to any member state and work there as an attorney. So, private persons do what they do, and they act as agents of integration. Now, you see how important that was—the court developed a direct effect and changed the whole system. From now on, every private person concerned that their rights were infringed could go to the courts and act as an agent of integration. I’ll leave it here as promised. W2 The sources of EU law, I think you also talked about this with Roland, are primary law in the treaties. There are two main founding treaties now: the TEU, the Treaty on the European Union, and the Treaty on the Functioning of the European Union. Main sources of so-called primary law, which is the treaties. But it's not only treaties; it's also protocols because, you know, international law often questions which are very complicated, very detailed, very technical. You put them into protocols. Or things you want to hide from the public, you also put them into protocols. And a very nice example is the protocol number 17. I think it's number 17. I sometimes mix it up with number 27. Maybe look it up. Otherwise, I'll say something wrong. Is the protocol number-- I don't find it now. Select protocols. I'm told it was number 17. I have to look that up. Let me say it's number 17 because it's the protocol which says that the European Union is based on a market competition legal order, understated competition. I think it's number 17, but it's not in the Blackstone, which is funny. However, so 27, it's number 27. Thank you very much. Sometimes it makes that up. Number 27. Okay. When the Treaty of Lisbon was negotiated, there was a general election in France. It was a general vote on the treaty. And the French said, no, we don't want to have it, except for the Irish as well, actually. The Irish also said, no, sorry. Referendum, thank you very much. Referendum is right. Referendum. And the Irish and French said, no, we don't want to. The Irish campaign is led by a very conservative, I think, anti-European Union campaign, which was funded, I think, from foreign countries, Murdoch and so on. I remember because I lived in Northern Ireland. And they said, when the Treaty of Lisbon will be introduced, there will be a general right to abortion. Exactly. And Ireland will lose its independence, its neutral status on military issues. Not that Ireland has a very big army, which is very important. The abortion question is totally crazy. It was just an invention. There's no right to abortion under EU law. There's just the right of services, free movement of services. So you can go as a woman from Ireland to, I don't know, the UK at that time, now to continental Europe and have an abortion made and Irish have to pay. That's right, actually, but that has been the case before already. So this was just... The French had another idea. It was probably also misleading. They said, well, there's much too much competition in the European Union. And so in order to resolve that problem, what was before Article 4, TEEC, or TEC, Treaty on the European Community, which says there shall be undisturbed competition, was now adhered to in the Protocol No. 27. We have the same rule, and the government of France could say, well, there's no competition rule anymore in the treaty. It didn't say to the public that there’s a competition rule in the protocol. Protocols and treaties have the same legal value for the same legal level. Okay, well that's what they did. Long explanation, but it's just interesting that what you have to try is protocols and sometimes it's necessary to look into that protocol number 27 for means of interpretation as well. ### W2.1: Methods of Interpretation This will be the point we have to also think about is methods of interpretation sorry methods of interpretation this is something we already talked about before um so I can go over quickly there's another point I want to be more into detail so how do we interpret European Union rules that's what I said before already mostly actually teleological okay I have I have that here as the fourth point. Most important teleological approach of interpretation. We use the idea of the common internal markets. We think about uniform application, the aim of ever closer union. And all this together is the teleological approach. We look at the aims and objectives of specific rules. And then the court very often says, well, that's the fate of integration, so that's how we interpret rules. That's only very broad. Language and systematic interpretation play a role. They're not that important because we have 24 official languages. Serbia comes into the EU, we have 25 official languages because the Serbian language and the Croatian language are two different languages. Although I think you can understand the other language. If Ukraine would come to the European Union, then we have the Ukrainian language, which goes to the Polish language. I think it's closer to Polish than it is to Russian. It would be another language. So all the time we have these mistakes with translation. That's why the court, and sometimes you also, that's an important point maybe. Sometimes you can use that. We have different languages as a means of interpretation. I'll give you an example. If you look into Article 101 TAPU, this is the prohibition of cartels. And the prohibition of cartels says that more or less agreements between undertakings and so on, which have as their effects or objects the prevention and restriction of competition, and so on, shall be prohibited. Okay? And there's also a condition that these agreements may affect trade between member states. The German wording of Article 101 is not “ affect”, because we don't have that word. It fits very nicely. “Effect” you say in German, the word in German is "hindern" which hindern, hindering, okay you understand in English as well, which hinders trade with member states. Now the question was whether Article 101 is applicable if an agreement- specific case has positive effects, effects now with E, effects on trade with member states which can be the case in specific situations. Okay, effect with E or affect or hinder it? What is the right interpretation? The German argument would be well, hinder means less straight. So Article 101 is only applicable if you have less straight. English affect is very open. Affect means any effect, okay? Always get “ If the specific cartel agreement somehow has an effect on the trade of member states.” Now the court, the argument was, well, how is the French version of the treaty? In French it says affectui, affecti, affecti. Affecti is like in English, like effect, okay? and the version in Spain also the same and so on lots of languages they look at all language versions and sometimes see what's only the German version says hindering and there's a reasoning that and a good argument that what is meant is the effect not hindering is you can use that if you look into different languages that is a language interpretation where you take different languages to account, which of course means you have to look at the Polish language, the Croatian language, all the languages. Normally you look into the German, English, French, maybe Spanish language, and one Slavic language and you try it. Google Translate or so, or DeepL, and then you can look up whether there might be an argument for your case. What we never use, I wrote here hardly ever, or we saw that never, is historical interpretation. Okay, the court did not become a friend of historical interpretation, because that's also in theory something which is somehow funny. Historic interpretation means what the lawmaker thinks that they want. But actually, who is the lawmaker? Is that the parliamentarian who wrote in favor, but never knew something about most parliamentarians have no idea what the voting is about? There are somewhere around 700 people in the European Parliament, and the work, as in all parliaments, is done in committees. So there are 20 or 15 or 30 people on the committee, and they have maybe, in the best case, an idea, but there's one rapporteur, who is doing the work, actually, and he or she knows what's going on. Okay, so we don't put much confidence in what the parliaments do. It's of course necessary that we have parliaments, but historical interpretation, it's maybe also something that the Commission wanted, but the Commission is not the lawmaker, so the court doesn't use historical interpretation. Principle of Effectiveness Last point for today, but very important: effectiveness. We already had that. Effet utile is very, very important for business law, and that's why we have to have a closer look. So I give you a very nice example, or one you already know. It's the question of Panchen and Loos, of course. There's one about Frank Poulsen, a very nice example is the Courage case. Panchen and Loos is also a principle of Effuitil. So let me give you an example of the Courage case. about the interpretation which goes over interpretation, as a principle of interpretation, but also as a principle of developing law. So when the court has the leeway interpretation, it will take the interpretation which has more, better, useful effects for the objectives of the European Union. So that's what we saw in van Geen laws. There were two possible interpretations of Article 30 with or without direct effect. And the court said, well, direct effect has useful effects. It's effective. (no shit) It will be better for European integration. Now there was a nice case, the Courage case. And von Coulson is also nice. I'll come back to von Coulson in a moment. In the Courage case, there was the question whether, actually, the case was about beer. A pub in Great Britain was buying beer. The pub was claiming damages against the brewery. no, that's too far away. So it was a case, a pub against a brewery which was in a cartel with other breweries, so the price of beer was too high. The EU cartel law says it’s void (art.101/2). It was a cartel. The problem was that the effects of or the legal consequence of European cartel law is that the cartel is void. Okay, that's article 101 paragraph 2. And the next effect is that the commission can release a fine against the breweries, okay? They have to pay, say, 500,000 pounds or euro, whatever. That's also nice, or a million, or a billion, or whatever, okay? Depends on how big the cartel is, and so on. But the pub, over years, has paid too much money because the beer was overpriced. Now, but the question of Courage was, does Article 101, which is the contract revision, there's no wording about this, also mean that the private party which has damage has the right to claim damages? Okay? Okay? So this was the question. Right to damages. The problem was that British law, the same as German law actually, did not foresee any right to claim cartel damages. It's now different. You know, the cartel damage directive. But at that time there was no such directive and there was no national transpose law. So it was just a very open question. Of course, you can always apply German law in some way that there would be a possibility that there's a damage claim. We have lawyers. I don't know if it's in China or in EU countries, but we think always lawyers can do almost everything. We apply national law and we can interpret it in almost any way. So the court was at the question: does Article 101 mean that there's also a right to damages? And what's the correct answer? Is there an argument that there should be a right to claim damages even if Article 101 only says that the following shall be prohibited and that is cartels? There's nothing else. What argument could we make to develop the right to claim damages? The old one was Article 85, exactly, until 2000. 1993 was Article 85, in Korygz it was Article 81, now it's Article 101. The numbers were changing a little bit. It’s getting a bit frustrating. We learned the numbers and I hope it doesn't change anymore. Oh, 85? It was 81 at that time in the Korebs case. Why would it be jeopardized if there would be no right to claim damages? I'm not even sure if that is exactly the argument, but you could make that argument. Not exactly the argument what the court made, but it's very near to what the court said. It's very similar, actually, to van der Krempe laws. Yes, Mr. Could you open that out a little bit? It was the rights of the strippers belong to the parties and they're nationals. So they have rights to the kind of stuff. Okay, so under Article 101, let's say, the one brewery to the other brewery could say, well, the agreement is void. So there’s a direct effect of Article 101. That was not a question. The question was, can we develop a new right, actually? And I think you have a good point in mind as well. As Mr. and Mrs. Oben, then it's very similar, very close to what the court at the end said. What would the court say? Right, they think of an individual as an agent. That’s the starting point again. Now, I don't know if you, anybody of you, has an undertaking? Okay. If you have an undertaking, why would you not enter into a cartel? Let's say you make trucks, okay? You are Daimler trucks. Do you know Daimler trucks? No? When you look at the star, Daimler is the biggest German truck maker. They have these huge trucks, also very strong in Europe and all over the world. In the United States, they own Freightliner actually. It's one of the major truck makers. Daimler was actually inventing the first car in the world. Where did it drive? It drove only a few kilometers from Mannheim. Ladenbrock. The car was invented here in Mannheim. Daimler's truck is still producing trucks here in Mannheim. Back to that, Daimler, if you were a Daimler truck, why would you not enter into a cartel? Why would you enter into a cartel? What's a cartel useful for undertaking? You know what a cartel is? Yeah. So when you go into a cartel, what could your incentive be? You can have higher prices. It means more markups, more earnings. That means you get richer. Why would you not enter into a cartel? Sorry? Less margin. Why would you get less margin? In contradiction to that, what Mr. Nikic said is that there are more earnings. And you say now there are less earnings? Why, okay, yeah, but as long as the cartel is functioning, that is your cost doesn’t matter because you can always put up the price. You will just argue with, negotiate with, your cartel members. The price should always be over your costs. You don't even have to innovate anymore because you will get to control the market anywhere, possibly, at least okay, so that means more earnings, but when would a cartel, let's say, become a bit nasty if it's kind of problematic for you exactly? If it's revealed, okay, if the Carter administration, Germany Bundeskartellamt, in the European Union, the Bundeskartellamt, Federal Carter Administration, or the European Commission would reveal the Carter, and you would have to pay a fine. Let's say one billion euro, which is bad. And now you don't only have to pay the fines, which might take all the gains from you. That's how you should have more losses than you have earnings. In order to de-incentivize bias, I think that's the right word, you from entering into a cartel, it should also be the case that now the damaged parties, like the pups, could also claim money from you. That means you have a double whammy. On the one hand, you have to pay the fines, and now you also have to pay the damages, which means it'll be double worse, double bad for you. So the court said, well, first of all, it might not always be the case that the commission can enforce or reveal that there is a cartel. Sometimes also private persons find out that there is a cartel. They could claim the damages, but even if the commission claims damages, finds the cartel companies, now the private parties would also claim the damages, and that would make cartel law more effective. And that's why the court answered to the national court, which asked the question, should there be a right to claim damages? Yes, there is a right to claim damages because now there's no wording in the treaty at all. The court said it follows from the useful effect. That's what the European Court of Justice, which any constitutional court actually could do, can invent new rules under the principle of FAUT. Okay, so the access to claim for damages was one of the examples. And then even civil procedure law also coming from Article 101, because of course you cannot claim damages if you have to, if you don't have access to information, especially information of the cartel companies. So the court said, well, under Article 101....right to also have an insight, to have the right to access files of the defendant's company. That was the Donau Chemie case. You don't have to remember that or any examples. So it's just the examples. Right to have access to access files of an antitrust proceeding in order to enable you to claim for damages. And so on and so on. And all this is a consequent Article 101 TPU. What I want to show you here is not that you remember the specific cases. First of all, I want to make you sensible for the way how the European Court of Justice argues. That's not just the aim of this slide here. So the court can decide a lot on the principle of ephratil. This is one, let's say, one consequence of ephratil, is the court decides and develops new rules. Van Gerderloos was developing a new rule. Costa- Anell was developing a new rule. And I'd say here courage, courage is in English, courage, not courage, it's courage, it was also inventing a new rule. Okay, so this is like one possibility. And what the court also says, as in another light of, or another, yeah, let's say outcome of a fair deal is the principle of harmonious interpretation. And this is something I would also like to, at least in the last 10 minutes today, show you in a little bit more detail. Maybe we have to go on with that tomorrow, on Wednesday. So this means, a harmonious interpretation means, that member states' judges have to interpret their national law in the light and wording of EU law, of directives and of European Union law. All okay. What does that mean? I'll give you an example: the fun course in common case. I'll skip that for a second. Okay, the fun course on common case was a nice case. It was also about equal access for females to jobs. So two ladies, Mrs. von Kohls and Mrs. Carman, wanted to work in a prison. They applied for a job in a prison to be guards. Okay? The German authority in Niedersachsen, that's a bit north of Germany, Niedersachsen is the place where the Anglo sections came from. Anglo sections are coming from Germany in the area of Niedersachsen. Same word. And Anglo is another Anglo. It’s a little river and place of Angel Saxon between Angles and Saxons. That’s where the first settling settlers of the first German settlers to England came. That’s why it's called Anglo-Saxon. Uh, well, traditions, um, so they spoke German, actually all German at that time. What I want to say is, uh, in the Mrs. von Coulson and Mrs. Carman case, they were rejected. Why? Because they were women. They were female. Why would you reject female guards because they should guard in a prison where the inhabitants, the prisoners, were men? I don't know if it's a good idea. Female guards guard male prisoners, but at least it's not impossible. So there can be reasons because some men are very, say, criminal, very violent, but there are also men who are not. I heard about this. You too, as well, totally. There are men who are nice guys. There are men who are not nice guys. So, however, maybe the argument of the person was a bit broad. So, Mrs. von Poulsen, Mrs. Cameron, went to court. And the court said, you're right, there was discrimination in this case because there was no such rule. There was not... They didn't even reason. They just said they're female and we don't accept female applications to this male prison. Okay, this accepted that there was an infringement of the directive. Now the directive says they have to have equal access to jobs without looking at whether female or male. Okay? Now, what is the sanction? There was no sanction in the directive. So the German court looked into the German law. It was at that time paragraph 611A of the BGB, German civil law book. And there it said, well, you have a right to claim so-called negative damage, which was the damage in an amount if they would not have applied to the job. Now if Mrs. Fulson, Mrs. Cameron, would not have sent the letter, they would have spared three German marks. That was their damage. So the court said, well, you have a right to claim three German marks as a consequence of the breach of equal rights for women. The German court had the idea to ask the court of justice, that's like maybe not effective. Maybe we should do we have to is that okay with that directive if we say the legal consequence is 3 marks there is no rule in European law about sanctions so how should we decide but the case was in 1983 and how did the court decide the whole case but it is like the case when you look at that case you know how courage has been designed maybe, okay? What did the poet say? Is free German marks a sufficient sanction for a female being treated unfairly? Most of the students here are female. I don't know. What would you say? In Indonesia, is that, Mrs. Tobing, is that a sufficiently effective sanction? No. The German prison would say, well, three marks, perfect, let's do it. We just discriminate all the time. If you only have to pay three marks, three marks is now 1.50 Euro, not about 1.45 Euro, then you say, well, that's okay, we'll do that all the time and we don't mind breaching the rights of female workers. So the court said that's not, the answer of the court is no, that's not effective, you have to engage in just serious sanctions. Coming back, the case came back to the German Bundesgerichtshof, German Federal Court, maybe it was another court, doesn't matter. And what did the German court do? And now that's about the principle of common interpretation. The court said, the Bundesgerichtshof said, under EU law, we have to apply that directive in a way that we have a sufficiently deterrent sanction. That was what the court said. There must be a deterrent effect of the sanction. Prison should next time know if we do that again, that will be very costly. The court said you have to interpret your German private law in a way that at the end there will be a sufficiently serious and deterrent sanction. That's the principle of harmonious interpretation. You interpret your national law in a way that at the end there should be, must be or will be a sanction which is in line with the directive, with the aim, objective directive in order to give female workers the right to work on the markets with the same rights as male workers. So what did the Bundesgerichtshof do? They looked into the national law and said, well, let's interpret the national law in a harmonious way. And it found another rule which said if you infringe personal rights, if you say somebody is ugly or somebody is, I don't know, you take the dignity at that time. Discrimination because of race or color was argued that could be a case of right of personality. There are lots of cases. There was a case where somebody's picture was used. There was a right where an interview with a monarchy and princess, Princess of Carolina, Carolina, that was her name, was invented. That was an infringement of her personality right. Things like that. And then the court said, “Well, a female has also a personality right, and it's infringed if she was discriminated against and attached to this there is a sufficiently serious sanction.” And so the court could argue that the person should pay three monthly wages as a sanction. You see what the court, the German court, did, was applying then totally different private law, trying to get in line with European Union law, and that's the principle of harmonious interpretation. That's what it says here. In the first line, national law has to be interpreted in the light of the wording and purpose of directives and of other EU law. So the German court then used a different rule in order to achieve the result which the directive was objected to. That was his idea of harmonious interpretation. The court applies that rule since then on honest interpretation. You don't have to do everything that you can in order to align your national law as a judge, judge, judge. You have to do everything you can in order to align your national law by interpretation to the purpose and to the results of the directive. You’re not obliged to do it contralegen, which means against the law. You don't have to breach your national law. That's contralegen. Contralegen is Latin. Contra means against or breach of other law. So national courts don't have to breach law because that would be direct effect then. Harmonious interpretation is indirect effect. That means you have to interpret law in order to align with national law, but you only use your national law. We call that indirect effect of European Union law. Direct effect would be if you apply the directive directly; you invoke the directive. That's not what the court did. The court of von Burson and Karmann applied German private law. That is not direct effect; that is harmonious interpretation. Okay, and national courts, if they cannot because of their methodology, interpret the law, so the Irish court would have much less anyway because, let's say, inventing new things by Irish courts might breach the principle of parliamentary sovereignty, not the sovereignty of the parliament, I think. So that is the case at least in Great Britain; it is, and you have the same tradition, I think, more or less, yeah, because you've been occupied by the British for hundreds of years. Lots of principles are similar. So that is like every court would have to follow their national methodology. But if you can, you must. If you cannot, you must not. That's what they have here. So this is quite some information today. I know it's really a lot for the beginning. And maybe you want to read the von Poulsen-Karman case. I uploaded that case as well. It could be interesting for you. We'll come back to that on Wednesday. Maybe you have a look until we repeat that again. There's a little sheet of effective directive , which you can look into as well. Yeah, and then we'll meet on Wednesday. By the way, next Monday, I'm not sure if this course can be held on next Monday, because I will be a private lawyer and there's a big private law professor conference in Heidelberg. Everybody has to go, it's just like... I'm sorry. Maybe I can send an assistant. On Wednesday I have to go to Berlin because I have a conference there where I also am active and a member of the board of that institute. So we could do the next, not this week, but next week we could switch to 8:30 here in this room. I already booked the room so I know 8:30 is very early but I also know that especially on a Wednesday. On Wednesday at 8:30. On Wednesday at 8:30. Okay, if you want to. So you say 8:30, that's so you don't have to put on the camera, as our colleagues today also did not. So you can keep like my son did in the corona pandemic in bed following the school. Probably lots of other students do it at home. So that's — I’m sorry but we have to do it at 8: 30 because I have to get the train to Berlin at 10:07. Okay and no other possibility for me, thank you very much for today, see you on Wednesday then this 10 o'clock 10 10 o'clock — yes this week 10 next week 8: 30. W3 BUSINESS LAW W3 W3.1 establishment of internal market Last week, we discussed complaints to the European Commission about tractor seat standards. Different standards pose challenges for importing products to countries with varying requirements. One possible remedy is to adapt to the standards of the importing country, though this may incur additional costs. You go to the appropriate court. Since we’re a German tractor seat manufacturer importing to France, we must go to a French court. The German court lacks jurisdiction over French law. We can invoke Article 34 of the French Constitution, which prohibits quantitative restrictions on imports and measures with equivalent effects between member states. This objective right allows us to claim that the French rule would infringe free movement of goods. Article 34 explicitly prohibits such restrictions, making it a subjective right. However, the French court can consider the objective implications of these restrictions. The Van Geen and Lewis arguments support this notion. The court’s interpretation of Article 34 should prioritize the rights of the country’s subjects. The private undertaking has the right to invoke national law and the treaty law under the national court. This right is necessary to fulfill the objective of integrating the internal market. Agents of integration play a crucial role in this process. Remember that? The court, along with private persons and undertakings, acts as an agent for integration. When they claim a right before a national court, they contribute to building the internal market. For instance, the case of Ms. Blazopoulou, who claimed to become a lawyer in Germany, led to directives. Each case contributes brick by brick to the internal market’s construction. The court’s reasoning is that prohibitions are necessary to balance subjective rights. Otherwise, they lack effectiveness. Prohibitions must allow claims to be made. Effectiveness is the second agent of integration. Additionally, we must enable and make rights functional. This argument explains the Direct effect. The Commission can claim infringement, which allows them to react in two ways: take action or express their opinion. In the case of tractor seats, the Commission can claim infringement and take action, such as engaging with citizens through channels like chat or speaking up. They can issue a directive based on Article 114 TFU, which we’ll examine later. Alternatively, they can go to court under Article 258 TFU. However, the Commission, despite its size, isn’t understaffed. These infringement procedures are resource-intensive. A friend of mine, who works for the Commission, asked for my advice on a procedure. They had a 14-page preparation for the oral hearing, including a 14- page paper for questions. This indicates significant work effort, with preparation lasting a few weeks. I’m also representing a case in court. If lucky, the oral hearing could be this semester. As a plaintiff’s representative, I’ll be one of the members of Parliament. However, this isn’t an internal market issue; it’s about democracy. To achieve the internal market, we must eliminate tariffs. Article 28 and 30 of the TFU are the main rules on this. Article 28 states that the union should form a customs union covering all trades in goods, prohibiting custom duties on imports and exports, and adopting a common customs tariff with third countries. The customs union prohibits customs duties and charges with equivalent effect between member states, as outlined in Article 30. While prohibiting custom duties is straightforward, introducing protective measures like tariffs is avoided due to their negative impact. Non-tariff charges with equivalent effect, such as veterinarian control fees, can be considered tariff barriers as they impose unnecessary burdens on importers. Taxes, which are not directly connected to the import procedure but are paid later and discriminate between foreign and domestic goods, also constitute tariff barriers. Discrimination in the internal market is detrimental to the concept of free movement of goods and services, as discussed in last week’s lesson. The internal market is beneficial for freedom, policy, and harmonization, but it can hinder competition. Tariffs and equivalent tariffs can prevent competitors from entering the market, which is detrimental to fair competition. While terrorists can be imported, they must pay additional burdens, which are unfair and create an uneven playing field. This argument is frequently used in court reasoning, as it implies that the extra burden distorts competition. In EU competition law, a level playing field is essential, and imposing different rules can lead to distortion. Domestic taxes, especially on imported goods, further exacerbate this issue. Article 110 of the TPU states that no member state shall impose internal taxation on products of other member states in excess of that imposed on similar domestic products. Taxation must be non-discriminatory to avoid protectionist effects that can harm the internal market. Tariff barriers and non-tariff barriers, such as import quotas, are common in international trade law. Import quotas limit the amount of goods a country can import, like 100,000 tons of a specific product. Quotas are bad for competition because they set specific proportions of goods or services that each member state can import. This can limit the availability of goods and services to consumers and hinder innovation. Why is quantity restriction bad for competition? It’s not a free market, so you can’t access the market. If you can only sell a small amount compared to your competitors, it’s discrimination and distortion of competition. It could be unfair competition to certain companies or developers. Economies of scale mean lower costs per item if you produce something in large quantities. Economies of scope mean it’s sometimes cheaper to produce different products because you have a variety of products. Some mergers are efficient because they combine companies with good research and development departments to produce different products, leading to more efficient production. Non-tariff barriers, like CODAS, block market access and can also be discriminatory, like CODAS. The fundamental freedoms of goods, services, and more face a significant challenge in determining whether different laws, sales arrangements, product laws, and international private law have similar effects to quotas. This is a complex issue that poses challenges for achieving internal market goals. Competition distortions, such as cartels, market power abuse, and state aids, can also occur. Different laws can distort competition in various areas, including market access barriers that can have both rules and distortive effects. State aids, which have a more distortive effect, are addressed by specific provisions in Articles 107 and 109. The definition of the internal market, as outlined in Article 26 of the Treaty on the Internal Market, is not exhaustive. It requires the free movement of goods, persons, services, and capital within an area without internal frontiers. The four freedoms of the internal market are closely linked to this definition. Fundamental markets are about securing the four fundamental freedoms and harmonization, which enables free movement. They also target distortions of competition. The European Court of Justice has jurisdiction to combat these distortions, which are addressed by Carter law, state aid law, and harmonization. Market access barriers and competition distortions are often intertwined and can have both effects. It can be challenging to distinguish between them. For instance, requiring a national domestic diploma for medical students might be considered a market access barrier, but it could also be seen as a discrimination against foreign students. If such a rule were implemented in the European Union, it could be considered a distortion of competition and discrimination. But if you say it hinders, what are the characteristics of discrimination? When do we talk about it? It’s interesting because it’s like ego treatment, but discrimination differentiates people based on nationality. You have two groups: nationals and foreigners. Foreigners are treated less favorably. The structure of discrimination is always two groups: group one and group two. The member state says group two is treated less favorably. You could argue that people with diplomas from certain countries are treated less favorably because the diploma from one country is considered less good than the diploma from another country. Different diploma rules are discriminatory. Do you think they’re trying to achieve the same goal but are treated differently before achieving it? If they can’t access the market at all, is it discrimination? It’s also a market access barrier because you can’t access the market without the diploma. But it’s also discrimination because you’re treated less favorably. This played a huge role in the development of fundamental freedoms because they were initially seen as prohibitions of discrimination. The pure hindering effect wasn’t seen as sufficient for freedoms to be violated. We always needed discrimination. It’s easy to argue from the wording of Article 34 that it’s a quota. It’s discriminatory because foreign undertakings are treated less favorably than domestic ones. Domestic ones can sell as much as they want, while foreign ones are not allowed to. This distorts competition. However, the type of discrimination depends on how the groups are defined. For example, comparing people with diplomas to people with nationality is different from comparing people with diplomas to people without diplomas, even if both groups lack a medical diploma. If we define the group as citizens, there is no discrimination because everyone must have a diploma, which can be a German diploma obtained through a German university after ten years of training. This makes it difficult to distinguish between discrimination and market access areas without different treatment. All questions of equal treatment are extremely complicated. The application of the equal treatment rule is challenging because it’s difficult to determine what constitutes equality. For instance, a Russian person may be considered different from someone with shorter hair, despite being equal in other respects. This highlights the complexity of defining equality. To better understand this, we can refer to Aristotle’s book “Nomo,” which delves into the concept of equal treatment. Moving on, let’s discuss how the court concluded that the internal market also encompasses competition elements. This is now reflected in Protocol Number 27, replacing Article 4, TEC. The French sought to conceal competition in this protocol. Protocol Number 27 defines the internal market as a system that ensures competition is not distorted, providing the second element of Article 26, which is not present in the original treaty. In summary, we’ve explored the challenges of applying the equal treatment rule and how the court’s decision in Protocol Number 27 expanded the definition of the internal market to include competition. This provides insights into the stages of integration in the process. If there are free trade areas, there are customs unions, internal markets, common markets, economic unions, and political unions. However, the EU lacks political unions. Despite being more than a free trade area, it has a customs union with centralized tariffs. Article 31, TFU, states that customs, common customs, tariffs, and duties shall be fixed by the Council on a proposal from the Commission. This raises the question of the role of the Council, as it fixes tariff duties without the involvement of the Parliament, which is the only legal base in the treaty where the Parliament has no role. The Council is an assembly of ministers, likely finance ministers, who discuss and fix tariff duties. While this may not be undemocratic as all ministers are elected by the Parliament, it differs from the usual practice where all legal bases are released after Parliament approval. Sometimes, the parliament only has the right to speak and be heard, but it doesn’t mean it has no say. If it has the right to be heard and opposes a law, it will likely block another law. This is how politics work. Being heard doesn’t mean they have no influence. I’d like to leave the slides for now and discuss the basics of the internal market concept next week. Instead, I’d like to focus on structuring fundamental freedoms. One slide I’d like to show you is the interests of the involved parties in the internal market. We have a circle with the European common good on the left. This represents our goal of achieving an internal market, closer union, and the development of the European Union. The institution responsible for promoting these interests is the European Commission. The Commission is independent, supranational, and promotes the general interest of the Union as stated in Article 17 of the Treaty on the European Union. On the right side, national states also have their interests. They aim to fulfill their specific objectives, which could include protectionism, achieving healthcare standards, or other legitimate national interests. However, it’s normal for democratic wills in national parliaments to prioritize specific standards, such as high baby food standards, while other member states may prioritize affordability. These interests can be legitimate, even if they differ from others. Undertakings, such as companies, aim to maximize their markups and earnings, which may conflict with the interests of consumers and the environment. The European Council, composed of member state ministers, represents the national states and comes together to make decisions. The European Committee on Social and Economic Affairs, a secondary institution, is heard by internal market legislation. The European Parliament, which serves the interests of the European people, is composed of representatives of the Union’s citizens. Before the Treaty of Lisbon, the Parliament represented different peoples, but now it represents the European people as a whole. People in Germany, France, Ireland, and other countries have different nationalities, which led to the creation of the European Union to represent the diverse populations within it. Article 14 before Lisbon, in 2009, specifically referred to the “European peoples.” However, the current focus is on representing the Union citizens. Democracy is challenging to achieve due to the diversity of peoples, which necessitates debates and communication. The European Parliament now represents the citizens, not necessarily the European people as a whole. These citizens may have high standards for environmental protection, climate protection, consumer protection, and social goods. Incorporating these interests into lawmaking and fundamental freedoms is complex. For instance, the concept of freedom of good encompasses various elements, making its application difficult. Let’s consider an example: French liquor, Cassis Beligean. Cassis is a red fruit that doesn’t taste great on its own but can be mixed with champagne to enhance its flavor. However, its low alcohol content (around 17%) may be a drawback for some consumers. In Germany, the minimum alcohol requirement was around 21%. This meant French cassis de Dijon couldn’t be imported, sold, or marketed as liquor on the German market because it didn’t meet the German standard. The importer, Rewe, a supermarket chain, was importing Cassis. If Rewe brought it to market, they would argue it could distort competition and breach Article 34. Cassis would have to adapt its product to meet the German standard, which would result in a different product. The undertaking wanted freedom to sell its product as it was. The Parliament wasn’t involved, and the Commission would consider the common interests of Europe. The German government argued that the European common good was integration. Integration could lead to a free trade area and eventually, a more efficient internal market. The main goal was to maximize profit and efficiency, following the ideas of David Ricardo and Adam Smith. More competition in the European industry would lead to greater efficiency. I mentioned the eastern Democratic German computers, Robotron, the largest but not the fastest, because they lacked competition. Without competition, innovation is hindered. Barriers to trade hinder innovation. For instance, the Commission aimed to achieve efficiency and integration through the internal market. Achieving fundamental freedoms leads to people coming together, removing trade barriers, and creating a single internal market. This has indirect political effects. Common laws and the euro were established to support internal markets, reducing exchange charges. Free movement of goods is the foundation for the euro and internal markets. Without it, free movement of establishments is impossible. Freedom of establishment allows capital allocation to the most efficient locations and product sales across Europe. This system is the European common good. The Commission focuses on this, while national states, such as Germany, may have differing opinions. For example, Germany has historically been more restrictive on alcohol consumption, especially for women. If you attend Schneckengolf parties, it seems different now. In the 70s, the German government banned 18% alcohol because women didn’t tolerate high concentrations. They argued that 18% would lead to excessive drinking, which was harmful to public health. The government claimed this was in the national interest and potentially the interest of consumers. However, critics argued that 18% was misleading and unhealthy, while others claimed it was a way to encourage excessive drinking. The government justified its decision by claiming it was combating consumer fraud. To address these concerns, the government introduced a minimum alcohol requirement of 21%. This was seen as a way to combat consumer fraud and promote responsible drinking. To implement this change, the government used the train app as an informational model. The app provided information about the alcohol content of different drinks, helping consumers make informed choices. In conclusion, the German government’s decision to increase the minimum alcohol content from 18% to 21% was driven by concerns about consumer fraud and public health. The use of the train app as an informational model helped to promote responsible drinking and combat consumer deception. The train isn’t displayed, which worries me. Here we are. It’s on time. How do we get to the informational model? We use the principle of proportionality to bring different interests into relation and mitigate them. Member states should be allowed to rely on or object to public health. They should pursue public health, but only proportionally. What does proportionality mean? Suitability and necessity. The measure must be suitable to achieve the social good, public health. Does a minimum requirement achieve public health? The court said no. German people enjoy drinking higher alcohol than they usually do. If a woman finds it too strong, she can dilute it. It’s easy to overcome this problem. So the measure is not suitable. A minimum alcohol requirement will increase alcohol consumption. People may not even notice the difference between 17% and 22%. They can dilute the alcohol and drink it, even for women. My mother drank liquor with 22% in the 70s without any problems. This measure is not suitable and is often a protectionist measure. Member states aren’t foolish. The German government knew it wasn’t suitable, but they had to find an argument. The course case was a funny idea. The second thing was misleading consumers. Why isn’t banning 70% alcohol to combat fraud proportionate? Maybe Germans are used to a certain alcohol percentage, and suddenly, they see a more expensive product. German consumers were used to 22% alcohol. How can we combat fraud now with a less strict measure like a ban? You suggested information. That’s what your information model is. The principle of necessity says we don’t need to prohibit; we can just inform. So, there’s no fraud anymore. This is a legitimate goal. Don’t mislead consumers. Banning weak alcohol eliminates fraud. Unlike public health, this measure is suitable for consumer fraud. But it’s not necessary; we can inform consumers. Since 1978, all alcohol bottles must inform consumers of the alcohol content. This is the information model. We can balance different interests, especially the European common good and the interests of businesses to earn money, with the principle of proportionality. We’ll discuss this next week. Remember, suitability and necessity are key. The two main elements are proportionality and suitability and necessity. Proportionality means balancing the burdens of prohibiting something and the burdens for public health. The court rarely does this balancing because it says member states should be allowed to do it. There’s a big discretion. The court says a burden is too high if it’s too high in relation to the gains of mandatory requirements. Remember, it’s about proportionality, suitability, and necessity. We use these to mitigate interests. However, some burdens aren’t caught by the fundamental freedoms. The fundamental freedoms are directed to measures that affect trade. Some measures have pure internal effects, and the court doesn’t want to interfere with them. For example, non-discriminative advertisement rules don’t distort competition but impose a burden. These are called CAC cases. We’ll go through the cases again. Now, we’re just on the conception. We want to catch everything that hinders market access and has distortion, but not without distortion. We need to define this more specifically. We need to go to trade restrictions because Article 26, TFAU, says we want to achieve an internal market without internal frontiers where the free movement of goods is ensured. This means trade in free movement of goods is ensured, not internal provisions. If you ban or restrict advertisements in pharmacies or for tobacco products, which many member states now do due to a directive, there will be less trade. However, these restrictions have more internal effects. For example, Germany and Great Britain have Sunday selling bans. In Germany, this ban prevents product sales on Sundays. In Great Britain, it was a Tothenborough Council case. The argument was that this ban restricted economic freedom, as it prevented goods from being sold and imported, which could hinder the free movement of goods. We consider these measures to be in the national interest and for the common good, as they only have a pure internal effect and don’t affect the free movement of goods. They don’t impact competition between member states’ undertakings or affect domestic goods or important goods like Sunday selling programs. Advertisement rules that have no distortive effects, such as these, may not fall under fundamental freedoms. This gives you a picture of our goals with fundamental freedoms. We aim to establish a European competition that serves the interests of businesses and the common good. However, national states have conflicting interests, often prioritizing protectionism over efficiency for their shareholders. To address this, we’ll employ the principle of professionalism. Next week, we’ll delve into specific cases. For those in the free movement course, we’ll cover key cases in more detail. I’ll share examples like the Cassis diligence case, which introduced proportionality and justification. Today’s session covered the complexities of the system. If you’re here and have free time, please review the course materials. You have access to Elias, and I hope all those joining us in Mannheim soon will obtain their visas. Thank you for coming early today. We’ll have no time restrictions from now on, but I attended the conference yesterday and Monday. See you next Monday. W4 We share production. Everybody does it at the place where he has the lowest cost. And then you can export your products and everybody will pay. That was Adam Smith and lots of great topics in his son. It was like a visible hand with market and these great things. We can talk about that later. This was Adam Smith and Ricardo mentioned even-- that's like the idea of cost advantages. You go there, we have lower costs. And Ricardo said, we don't want comparative cost advantages. So if you want to look that up in a very nice article in Wikipedia, because it takes a lot of time to explain that, but comparative cost advantage means that splitting up production is even an advantage for those countries which are less effective in all products. So if Portugal is less efficient in the production of wine and cloth, and Great Britain would be more efficient in the production of wine and cloth, it can even then make sense to split a production, and that the British produce cloths and the Portuguese produce wine. That was the example of Del Ricardo. Because it might be so that the efficiency difference of cloth and wine in Britain is higher than the difference would be in Portugal. I don't want to explain it because I'm not an economist. I think I understood the thing, but I don't want to explain it because it would take me a lot of time. But you can look it up in Wikipedia. And I don't know if you understand David Ricardo's Piemonte, comparatively cost- to-profit. That is just to be said that these ideas have found the entrance in the system of all free trade agreements, but especially also into the common market design. And that's why we have two different sorts of freedoms. The one sort is two location related freedoms, which is free movement of persons and free movement of capital. So persons and capital can go to the place, to the location where they find the most efficient environment to work, produce or invest their capital. And from the place of the investment or the place of the work or the place of the establishment, then you can export your products within all of the future markets. That's why we have two product-related freedoms, which is goods and services. Article 34 and 56 TFU. And the idea is that at the end, we will split up production. Everybody will go there where they find optimal environment for their production. So that will lead to efficiency. That's the idea of the fundamental freedoms. First there is allocation of capital and workers and persons, also establishment of undertakings and then we produce goods and services under the optimal conditions. Which takes, which happens of course. If you want to build a car, let's say now VW is in problems, they want to lower their costs and they might expand their operations in Slovakia or wherever where they can produce more cheaply in order to produce cheaper products and meet competition there. The idea of all this is we want to create a EU-wide competition. Because that means a competition between undertakings within the European Union. Also, as a side effect, sometimes it's said a competition between locations as well. I wrote here locations and companies, but mostly in the first place it's a competition between companies. Also locations that the court found that for example this can be useful to apply this law to member states also because member states legal systems might get under pressure and have to be adapted. This is for example company law. Because lots of German companies established in London or the UK, now they do in Ireland, to establish as an Irish limited, which is much cheaper than German GmbR. Okay? And so many companies established in London, now Ireland, but they do their business only in Germany. And that's put pressure on the German government and lawmaker, and so the German was created, which is rather similar to where we live in. So trying to prevent companies going to Ireland because that is creating a lot of problems for the German system and business as well, because nobody knows how an Irish dividend functions. Okay, that's more theory now. For practice, we have to know how the freedoms work. And this is, as I said, they work as guarantees to allow market access, free of discrimination, market access without any kind of discrimination and hindrances. This system is the basis for the single market. I have another notion here for the concept. There is a notion which I think is called a restricted single market. So we're talking about 27, maybe even more, member states. I was in Berlin last week and I met the Albanian ambassador to Berlin and she told me that Albania is almost accession-ready. So we were talking about it. The conference was also about accession. I mentioned that I said that we can do a lot of compromise, but not compromise to the rule of law, so it must be ensured. And then there's Adia, I forgot the other name, from Albania, I can't say, Albania are very, very ready for accession. So there might be in a few years, I don't know, Albania, Serbia is on the brink, and I don't know what else might come. So, there are lots of countries, Canada, Ukraine, that will surely take lots of time until Ukraine will become a member, at least I hope so, because we don't want to compromise on the rule of law. However, 27 member states want to achieve a common, now internal market. Market. And now this, when you think about last week I was explaining different interests, all these member states have their own legal cultures, their own business cultures. When you think Beijing would not want to unify law without, it would be very difficult, okay? But the same applies also for Berlin. We don't want to, I don't know, give up all our traditions. And if we say, well, German beer is only beer if it's brewed under the purity rule from 1514, then maybe I should be right to do so. We'll find out whether this is the case later. But what I want to say is we cannot, in an international organization, which the EU still is, we cannot give up all specific traditions, legal systems, totally and unify the whole law. Internal market would mean a market which is like the market of a member state, like one state. That's the idea. But we cannot achieve that. And that's why we have some restrictions. That's important for you to understand, for example, the CAC decision, also justification as an invention of the European Court of Justice. We talked about Cassis de Jean last week. This idea comes from here, a restricted single market. You cannot achieve a single market. And we'll have some cases, so that'll become more plastic. It's a compromise between single market idea and sovereignty of member states. And there are some elements where you can find that compromise. This compromise we find in the scope of prohibitions. Some things are not within the scope. For example, public administration is taken out of the free movement of workers. Why is that the case? That's a compromise. Public administration, but not all public administration will find out what restricts in that compromise. Justification, okay, that would be another element where there is a compromise and also limited competence. So we don't have full competence in our nation. This is limited. The scope of prohibitions is also, for example, the CAC jurisdiction. We'll talk about that. We haven't discussed that in detail. There are some key aspects. We have free market access, no discriminations, no hindrances, but not fully achieving these goals. There are some compromises and that makes it difficult. Now the first thing is that already in 1976, the court said that environmental freedoms are directly applicable. So this is not the first case, but it was one case where it was very clear, directly applicable, and confers rights to individuals. This is something we have since a long time. The court said the provision in Article 34 is mandatory explicit, it therefore has direct effect and creates individual rights which national courts must protect. That's very clear. Fundamental freedoms, as we already talked about, confer direct effect and especially individual rights to private persons. You have on Ilias this sheet here, my monographs on fundamental freedoms, and it's like how to test fundamental freedoms. And the test is three main elements. Let me look at that sheet, it's on Ilias this week. The first, you always have to look at the scope, and whether there is an infringement, second, and third, whether there is a justification. And if these conditions are fulfilled, then there is an unjustified infringement, and we look at what element of legal consequences, which are mostly not that problematic. So we look at the scope and we look at the infringement and we look at justification. That's like a structure, a structure like fundamental rights as well. So we have to know scope means, for example, what does goods mean? That there must be a cross-border element, that there must be a state measure, which is a bit more complicated than this on the sheet here. Specific fundamental freedoms is here like free movement of goods, service, where there is a service for the goods, and so on. Okay? Now, we go to Article 34, and Article 34, the notion says: banned are quantity restrictions on imports of goods in all measures having equivalent effect to quantity restrictions. That's what the norm says. That shall be prohibited between member states. Initial understanding, very clear: This is a prohibition of discrimination due to the origin. Okay? Because quantitative restrictions are discriminations. They are only applied to foreigners, not to domestic goods, so that means discrimination. And when you interpret that rule in the light of free trade agreements like from the PO, and this is similar, the national free trade agreement rule, as all trade agreements have, that is a non-discrimination rule, so the initial understanding was this is a provision of direct discrimination. And then very quickly, the court developed or found that not only direct discrimination, and we discussed that difference, but also indirect discrimination, also discrimination. So what the indirect discrimination difference is, we'll talk about that. But anybody have an idea just for now, what direct discrimination and indirect discrimination is? It might be easier to talk about direct discrimination of women. Employer, this comment directly women. Maybe it's when for example, you know, it's talking about like in German descriptions they directly said that they only want a man for the position. And in terms of this interior discrimination, in terms of interior discrimination, it's like when it's not directly written but it implies that... Exactly, exactly. So a colleague said if the job description says we want to hire pilots, brackets, M for male, brackets, that is a direct discrimination because it shows we wouldn't hire female pilots. Sometimes you find that in Germany, advertisement on like bakeries, they want to find a selling person, and then it says "verkäuferin", which means "only female". That is a direct discrimination because it shows they will only hire female, but not male. Traditionally, the people who are selling in bakeries are almost always women, that doesn't mean you wouldn't have a chance to get this position as a man. Of course, I don't know if you want to have that position, anybody of you, but you can. There should be no discrimination, that would be direct discrimination. And indirect could be something which is not... you distinguish whether there's a job discrimination, but the criteria are in a way connected to male that in practice only male fulfill that. For example, if you would say I want to hire a person, which not discrimination, must be very flexible, working day and night if you want to wish that, must be able to work day or night, and also on Saturdays and Sundays, if you want it. And if you would also connect... That already could be indirect discrimination, because in practice, females more often take care of children, and they might not fulfill that criteria. Even clearer, if I would say, for a truck lorry driver, I would say you have to speak German, which would indirectly discriminate people which are not Germans. Because a French or, I don't know, a Polish driver, especially a Polish driver, might not necessarily speak German. But he could, of course, drive a truck. And that would be an indirect discrimination because in practice, it's more or less only a protected group, like women who are foreigners, European citizens, not Germans, would not fulfill the criteria, would not get the job. So this is already a huge development, okay? The first initial prohibition, initial understanding was direct discrimination. And going to indirect discrimination was already a huge development. Because in practice, almost all cases which are not direct explanations, which we rarely have now, almost all cases are indirect explanations. Very question. Yes, is it discrimination if it's justified? No, we'll come to that. By the way, that's not an easy question. I think we don't want to discuss that in detail because it's maybe more philosophical than legal. But if it's justified, it will at least not be infringement. Or you could say there's no legal consequence. You could also say it's justified, it's not discrimination in the first place. But you would have to read your estopa first. Okay? To make it look... and even then it's not always clear. Okay? So, that would be like the huge development. Now let's go to the scope, infringement and justification. So, first point would be like, when is Article 34, when I'm talking about free movement of goods, applicable? Okay? That was very well developed. Obstacles you also catch under certain circumstances. So, testing Article 34, we have to look at applicability. Which would be a cross-border situation that we have goods, but there's no harmonization, and there's a measure of a state or accountability to the state, which is a little bit more complicated. That's why we have a specific slide on this. Okay? So first element is you always have to have a cross-border situation. Why is that the case? You can read that out of Article 26 or also Article 24. There is a word argument for this free movement of goods between member states. That's the idea. The import of goods, which then Article 34. All imports, measures on imports. So there must be a cross-border effect. Article 34 is applicable only for a situation where there is an import. Which means you cannot apply Article 34 on any kind of situation. Sorry, any kind of situation which is totally internal, okay? Totally internal is a difficult word but might not be that easy, but if you import the product, okay? And the product is now in Germany, it still is an imported product. If you discover that imported product, then it's still a cross-border situation. But if you, let's say, if you as an Irish live in Germany now, then it could be an internal situation if you want to apply for a job, and they say you don't have the diploma, because it doesn't distinguish between Irish, there's no trade line here, okay? Which is complicated enough. I don't want to go into that, that's for the fundamental freedoms lecture. Of course, just look at that in more detail. But the idea of the freedoms is there must be cross border situation. Otherwise you're not entitled to claim a right. So that would be one element. And second would be, there must be goods. Notion of goods is also, I want to go to that. Anything which is worth of trade, any product which is worth of trade, which is not a service. Service and goods can be very similar. Because they're both products, actually. Only the product is, how do you say that? There's an element here. There is a... What's that in English? Tangible? Tangible. Tangible. It's tangible, tangible, tangible. Tangible thing, which you can take in your hands, or at least put your hands on. The service is not tangible. At least it's not like if you're legal services. You can also deliver papers, but distinguishing between a good and a service is more like, where is the main point? Is it the thinking part of the lawyer, or is it the creation of paper? In the way where the main element of the business is developing the text, the writing is not the paper as a product, the potential of the lot. That's why we have this theme of shear. And any customs duties or charges having a permanent effect, which are payable, having been levied in a member state, and if they have not benefited from a total or partial fraud like such duties or charges, what that means is, you find in Article 28, Paragraph 2, let's have a look at that, the provisions of Article 30 and of Chapter 3 of this title, and this is Article 34, Chapter 3, shall apply to products originating in member states and to products coming from third countries which are in recirculation. Now you understand Article 29. So Article 34 is applicable to goods originating from member states, so a German car, or it could be a Chinese car, Article 29, as soon as it has been levied with charges or duties, and they are repaid. Then the Chinese car is on the internal market and now can be traded from the Netherlands to Germany without any hindrances and discrepancies. But first of all, it has to enter the internal market. Duties have to be paid, which are European Union duties. And once it's on the European market, there's free movement of goods. That is foreign goods, third-hand goods. Why do we do that? Why are Chinese goods on the internal markets? Why is there a free trade of Chinese goods? That sounds funny at first, but there is a very good reason for this. Maybe Chinese or Nepalese goods, or whatever goods, also Serbian goods. Importing Ayva from Serbia, and it's now on the internal market. There are no import restrictions anymore from France to Germany or so. Why is that necessary? Is it because of the D'Assemblée case? Yeah, think about conceptual. Why we don't want to have any import restrictions, could be all discriminations or whatever. Conceptually, these goods are in a truck. From Rotterdam. This truck goes from the Netherlands to Germany, from Germany to Austria, and from Austria to Hungary, whatever. This truck goes with these goods from different countries, some of which are third countries, and some of which are member state countries. Different goods in that truck. Now what you don't want to do is you don't want to check these trucks in order to now start putting any kind of restrictions on Chinese or Serbian products in this truck. So the free flow of goods means there should be no any kind of checks within the European Union. That's why there is a free flow of goods in order that there should be no border controls. They just go from Räupelabend, once the duties are paid, everything can be brought to the member state without any hindrance and discrimination. Free movements are applicable on foreign third-country roads once they enter the market and are at the international level free of circulation. Okay, but that's one element. Absence of harmonization just means if there's harmonization which has a specific point, we should apply first the harmonization, the harmonized law. Okay, so that's what the quote says. It's the European secondary law in place, and apply secondary law. And the last point is measure of estate. I will come to that on the next slide because it is really interesting. Second element would be then, the first element would be applicability, the second element would be barriers of trade. We check whether there is a discrimination or an obstacle to trade. That is "person au bide" and whether there is no exception. That is "quique". And then we come to justification. There are two points, mandatory requirements and Article 36. This is how you test Article 34. And the main points which you have to look at and you look at whether there is an infringement of Article 34 and right. Okay? What is the scope? One element I already talked about was the goods and the explosion of goods. We don't want to go into that in detail. There is no definition of goods. I have a note here, products which can be valued in money and which are capable as such as forming the subject of commercial transactions. So that's probably tangible. Then, Article 29. Now, interesting point I would like to make is. Now, what I wrote before was a state is the embassy. And for Article 34, there has never been a decision where not a state has been held accountable to breach Article 34. So, let's keep it to that. But what does state mean, actually? You can take that for goods and services, the same thing applies, same rules apply.