The Week Nº29

The Week

10-14 June 2024

ISSUE Nº29

Pe nalt y paym ents

Preliminar y Rulings

En largemen t State Ai

TABLE OF CONTENTS

IN-DEPTH:

Impartiality unleashed? D&A Pharma v. Commission and EMA (C-291/22 P)

Jacopo Alberti

Tough Times for (non-) Courts! Yet Another Declaration of Inadmissibility of a Request for a Preliminary Ruling by the CJEU: NADA Case

Andrea Circolo

Safeguarding EU Law’s Authority: The General Court affirms the Commission’s Decisions to recover Penalty Payments from Member States by offsetting (T-200/22 and T-314/22, Poland v Commission)

Pekka Pohjankoski

Balancing Competence and Accountability: Authority’s dual Role in Disciplinary Proceedings ( T-766/22, Canal Ferreiro v. Council)

María Casado García-Hirschfeld

Differentiated Regional Rates of Excise Duties on Energy Product within a Member State are not authorised: DISA (C-746/22)

Sébastien Wolff

SYMPOSIUM ON THE 20TH ANNIVERSARY OF THE ‘GREAT’ EU ENLARGEMENT

20 Years of the ‘new’ Member States in the EU’s Common Commercial and Foreign Policy: reflecting on practical examples

Nicolaj Kuplewatzky

Enlargement of the EU and the Euro: Challenges for Future Member States

Phedon Nicolaides

Enlargement of the EU since 2004: some Experiences from the UK before Brexit

Catherine Barnard & Fiona Costello

COMPETITION CORNER: SYMPOSIUM ON SELECTIVITY IN STATE AID

Selectivity in the Tax Ruling Cases: Vulnerant Omnes, Ultima Necat

Dimitrios Kyriazis

The Dynamics of Selectivity in Tax Ruling Cases

Daniela Gschwindt

THE LONG READ:

The EU’s New Directive on Combating Gender-Based Violence (GBV)

Mathias Möschel

HIGHLIGHTS OF THE WEEK

IN-DEPT H

Impartiality unleashed? D&A Pharma v. Commission and EMA (C-291/22

P)

Jacopo Alberti

On 14th March 2024, as already reported, the Court of Justice ruled on an appeal from D&A Pharma to overturn the General Court’s decision in case T-556/20, which had upheld the European Commission’s denial of marketing authorisation for the drug Hopveus (sodium oxybate), intended for treating alcohol dependence.

The Commission’s decision was based on a negative recommendation from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA). Before challenging the Commission’s decision before the General Court and, then, the Court of Justice, D&A Pharma exploited the administrative remedies set forth by Article 9(2) of the EMA establishing Regulation, requesting a re-examination of the CHMP’s opinion. For the purposes of that re-examination, the CHMP convened an ad hoc expert group, that however decided to confirm the negative assessment already made by the CHMP.

As often happens in this realm, where the Commission decisions usually copy and paste the recommendations prepared by the agency, the pleas in law put forward by D&A Pharma before the EU Courts were exclusively made against the EMA activity. In particular, the applicant claimed that the CHMP should have convened, for the purposes of the re-examination of the marketing authorisation, a permanent expert body of the agency (namely, the Scientific Advisory Group on Psychiatry) and not an ad hoc expert group. Moreover, D&A Pharma alleged a lack of impartiality on the part of two members of that ad hoc expert group.

In contrast to the General Court, and following the Opinion of its Advocate General (albeit with some differences), the Court of Justice upheld both arguments. While the former is definitely more appealing for pharmaceutical law scholars, the latter may be of some interest also for EU administrative lawyers and, in particular, for those involved in the study of EU administrative remedies.

Indeed, in D&A Pharma the Court of Justice has importantly developed the requirement of ‘objective impartiality’ enshrined in the principle of good administration set forth by Article 41(1) of the Charter. After having recalled that it implies that ‘each institution, body, office or agency of the EU must offer sufficient guarantees to exclude any legitimate doubt as to any bias’ (echoing, albeit not quoting, Chronopost SA) and that this requirement is compromised in case of ‘an overlap of functions, irrespective of the personal conduct of that member’ (something already stated in Dr. August Wolff GmbH), the D&A Pharma judgment adds some new elements to the requirement at stake.

Firstly, it states that the objective impartiality of a body is compromised also where the expert who is in a situation of conflict of interest is part of a group which is consulted by that body, if this group has a ‘potentially decisive influence on the [final opinion taken by the agency to which the body belongs]’ (para. 76).

Furthermore, the judgment marks a new approach towards the relationship between objective impartiality and collegiality. Even though this issue had not been treated in depth so far by the Court, in the previous case-law (the already mentioned Chronopost SA, as well as Spain v. Council) this element had always been cited as a limitation to the risk of an infringement of the objective impartiality: the more persons are involved in a decision, the less dangerous will be the conflict of interest of one of them. Conversely, in D&A Pharma the Court stated that ‘the fact that, at the end of its discussions and deliberations, that expert group expresses its opinion collegially does not remove such a defect. That collegiality is not such as to neutralise either the influence that the member in a situation of conflict of interest is in a position to exert within that group or the doubts as to the impartiality of that group which are legitimately based on the fact that that member was able to contribute to the discussions’ (para. 77).

Even more interestingly, the Court has taken this stance adding that these consideration are not invalidated by the fact that the expert who is in a situation of conflict of interest does not exercise a management or coordination function in that group (para. 79). This point is certainly very intriguing yet, unfortunately, not further developed by the Court. Advocate General Medina, in her Opinion, holds this same position arguing on the basis of a softyet-almost-hard act adopted by the same EMA, according to which an expert having a current interest in the pharmaceutical industry cannot participate in the re-examination procedure, whether in a leading/coordinating role or as a simple member – and, thus, the fact that the person in conflict of interest is a simple member of the group vitiates in any case the regular composition of that group. This certainly helps in contextualising the statement of the Court of Justice (and hinders its applicability in other contexts). However, the Court does not refer to this document in developing its reasoning, which thus remains quite broad in its scope (and, consequently, certainly innovative in its nature).

Moreover, the judgment further develops the mitigation of the burden of proof requested to whom alleges that a decision is taken despite a conflicting interest. In particular, the Court states that the appellant cannot be required to provide proof of specific indications of bias, such as statements or positions taken by the expert concerned (para. 80). Indeed, objective impartiality is to be assessed independently of the specific conduct of the person concerned. Even though this principle had already been stated in Spain v. Council and Dr. August Wolff GmbH, in D&A Pharma the wording chosen by the Court seems actually further strengthening the position of the applicant, which has to provide evidence of the fact that the objective impartiality of an expert is not beyond any doubt, leaving to the agency the burden to demonstrate that, despite these evidences and regardless the concrete behaviour of the person concerned, the expert is actually fully impartial.

Finally, the judgment sketches a rough test for balancing the general interest (in the case at hand, provided for by Article 57(1) of Regulation No 726/2004) of having the best possible scientific advice on any question relating to

the scientific evaluation requested to the agency and the need of impartiality and independence of the scientific experts. In particular, the Court stated that the reconciliation between those objectives has to be found under the polar stars of the right to good administration enshrined in Article 41 of the Charter and the principle of proportionality (para. 89). In the case at hand, this test brings to the conclusion that experts cannot have a current interest in relation to a rival product of the product that is the subject of evaluation (and, to assess the concept of ‘rival product’, the Court understandably used also its settled case-law in antitrust matters: paras. 92-117). This approach is certainly not new in the case-law of the Court of Justice (see, for a similar reasoning, UX and, from a general perspective, the jurisprudence on the admissibility of derogations to the fundamental freedoms through objectives of general interest). However, D&A Pharma develops it explicitly and clearly in the specific context of the assessment of the legitimacy of an administrative remedy.

Against this framework, one may wonder whether and to what extent this reinforced concept of ‘objective impartiality’ will be able to influence administrative or quasi-judicial remedies in other fields of EU law, such as FRONTEX’ Fundamental Rights Officer (FRO) or the Boards of Appeal established within several EU Agencies.

If the administrative review of a scientific evaluation of a pharmaceutical product shall be made by someone who is not only acting impartially, but also offers sufficient guarantees to exclude any legitimate doubt as to any bias, can the monitoring of the respect of fundamental rights in returns operation made by FRONTEX be exercised by officers who, according to the European Ombudsman, ‘cooperate and liaise with the Frontex coordinating officer of joint operations and provide advice and assistance to them’, giving ‘the perception that monitoring of returns is not fully independent where Frontex fundamental rights monitors oversee the conduct of Frontex escorts’? And can the quasi-judicial review of the Boards of Appeal be made by person who is not a permanent member of the Board and, thus, unavoidably perform those duties while acting as lawyer or servant of a national authority, supported by a Registrar who may be a part-time member of the Legal Service of the agency (i.e., the defendant)?

The differences between different sectors, procedures and actors involved should call scholars and practitioners to the greatest caution in applying the principles set forth by the Court of Justice in D&A Pharma to these latter scenarios. However, these questions demonstrate how disruptive this judgment might be, if the Court will bring it (or, if practitioners will be able to push the Court to bring it) outside the realm of pharmaceutical law.

For the time being, this judgment has already impacted the regulatory activities of EMA, delaying the approval of Esai’s Alzheimer’s disease drug (Leqembi). As a matter of fact, the agency has decided to annul the advice received in that procedure by an advisory committee, exactly due to the implications of D&A Pharma on the handling of experts’ competing interests. This judgment has, therefore, certainly raised the bar of the standard of impartiality, at least in the pharmaceutical sector. To what extent this will push a similar trend in the ever-growing system of EU administrative or quasi-judicial remedies is something to be assessed over the next years.

Jacopo Alberti is Associate Professor of EU Law at the University of Ferrara and holder of the Jean Monnet Chair ‘Verba volant, sed imperant? The Legal Challenges of EU Communication’

SUGGESTED CITATION: Alberti, J.; “Impartiality unleashed? D&A Pharma v. Commission and EMA (C-291/22 P)”, EU Law Live, 11/06/2024, https://eulawlive.com/op-ed-impartiality-unleashed-da-pharma-v-commission-and-ema-c-291-22-p/

Tough times for (non-) courts! Yet another declaration of inadmissibility of a request for a preliminary ruling by the CJEU: NADA case

Andrea Circolo

Introduction

It is now quite clear that, in recent years, there has been a marked increase in the number of declarations of inadmissibility by the Court of Justice of the requests for a preliminary ruling made by national courts under Article 267 TFEU (see, e.g., the Cases C-453/20 and C-204/22). There seem to be two main reasons for this, which, at times, can even intersect with each other: on the one hand, the Court’s will to rationalise the application of the Vaassen-Göbbels case-law, in light, in particular, of the enormous increment in its workload experienced in the last few years; on the other hand, the reinforcement of the requirements for a national court to be considered as independent, which can be traced, mainly, to the events that have challenged and questioned the independence of the Polish judiciary (see, for example, here).

Even though the NADA case does not fall within the context of systemic violations of judicial independence, it seems to fit into both the sets of reasons described: the Court of Justice declared inadmissible the request for a preliminary ruling from the Unabhängige Schiedskommission Wien (Independent Arbitration Committee, Vienna - Austria; hereinafter, the ‘USK’), as national legislation does not guarantee that its members ‘are protected from external pressure, be it direct or indirect, that is liable to cast doubt on their independence, with the result that that body does not satisfy the external aspect of the requirement for a court or tribunal to be independent’ (judgment of 7 May 2024, Case C-115/22, para. 53).

Order for reference

The main proceedings stemmed from a review request submitted by SO, a professional athlete affiliated with the Vienna Athletics Federation, against the decision of the Österreichische Anti-Doping Rechtskommission (Austrian Anti-Doping Legal Committee; the ‘ÖADR’) declaring invalid all his sporting results achieved since 10 May 2015 due to the possession and the use of doping substances, and banning her for four years from any kind of sporting competition.

While upholding the ÖADR’s decision on the merits, USK had raised some doubts as to the compatibility, with the GDPR, of the decision of rejecting SO’s request not to publicly disclose the details of his case. For this reason, USK decided to stay the proceedings and to refer five questions to the Court of Justice.

Decision

After the description of the dispute in the main proceedings and of the questions referred, the Court of Justice immediately started analysing whether the USK met the Vaassen-Göbbels criteria and raised some doubts regarding the fulfilment of the criterion of independence. In this regard, the Kirchberg Court recalled its settled case-law on the independence of the national courts, which is essential ‘to effective judicial protection’ and ‘to the proper working of the judicial cooperation system embodied by the preliminary ruling mechanism established by Article 267 TFEU’ (para. 39 of NADA Judgment). Specifically, the Court pointed out that the concept of independence involves two aspects, namely an external one, which requires that the body concerned ‘exercises its functions wholly autonomously’, and to which the principle of irremovability of judges is related (para. 41 of NADA Judgment); and an internal one, which seeks to ensure ‘a level playing field for the parties’ and is linked to the concept of impartiality (para. 45 of NADA judgment).

At this point, after emphasising that the outlined guarantees require ‘rules, particularly as regards the composition of the body and the appointment, length of service and the grounds for abstention, rejection and dismissal of its members, in order to dismiss any reasonable doubt in the minds of individuals as to the imperviousness of that body to external factors and its neutrality with respect to the interests before it’ (para. 47 of NADA Judgment), the Court concluded that the irremovability, and so the independence, of the USK’s members were in no way ensured.

In particular, the Court stressed that the mandate of the USK’s members may be revoked early ‘on serious grounds’ by the Federal Minister for Arts, Culture, Civil Service and Sport - i.e. a member of the executive power - but, above all, without such a procedure being defined in national legislation through precise criteria and guarantees. For this reason, the USK could not be qualified as a ‘court or tribunal’ within the meaning of Article 267 TFEU.

Concluding remarks

The NADA case is just the latest of the judgments of the Court of Justice which confirm the restrictive trend regarding the admissibility of references for preliminary rulings. In the present case, the inadmissibility is the result of the Court’s raising of the standard of independence of national judges, developed through Art. 19 TEU to counter its systemic violation in Poland, and, most importantly, of its consequent levelling with the smoother one required under Art. 267 TFEU, which definitively occurred with the recent Krajowa Rada Sądownictwa judgment. It is no coincidence, indeed, that the Court recalled, in all the paragraphs relating to the guarantees of judicial independence, the Banco de Santander judgment (paras. 39-47 of NADA case), considered by most of the scholars to be the first decision in which the Court had hinted that it intended to align the two standards of independence (e.g., see C. Reyns in ECLR, 2021).

Certainly, such a solution has its disadvantages: it significantly restricts the possibilities for the use of the preliminary ruling procedure by national courts, thus risking denying the dialogue with the Court even to those tribunals whose situations of apparent non-independence are not comparable to those assessed, for examples, for some Polish courts. Not surprisingly, the AG Capeta had concluded in the sense of the admissibility of the reference,

underlining that the USK met all the Vaassen-Göbbels criteria, including the independence (Opinion delivered on 14 September 2023, paras. 51-73) and even that it should have been considered as a court of last instance against whose decisions there are no legal remedies (AG Capeta Opinion, paras 74-79). This circumstance gives, once again, the real measure of how the application of the Vaassen-Göbbels case-law has produced – and still produces – controversial results.

On the other hand, it should be noted that a court is either independent or not-independent, regardless of the provision that is to be applied, and, for this reason, the equalisation of the two standards realised by the Court of Justice was desirable in terms of consistency. The recognition of two distinct degrees of independence, as called for, e.g., by AG Tanchev, who spoke of ‘qualitatively different exercise[s]’ in respect of Art. 19 TEU and Art. 267 TFEU (see the Opinion delivered in A.K., para. 111), certainly did not manifest an ‘exercise’ in consistency. Moreover, the Court’s ongoing confirmation of its restrictive orientation regarding the possibility of referring provides more legal certainty, to both parties in internal proceedings and national judges, in relation to the use of the Article 267 TFEU mechanism and its outcomes.

Lastly, it should also be emphasised, as the Court wisely did at the very end of the NADA judgment (see para. 55), that the fact that certain national bodies are not entitled to make a preliminary reference cannot and should not, however, be an excuse for not properly applying EU law.

Tough times lie ahead for (non-)courts!

Andrea Circolo is Assistant Professor of EU Law at the University of Naples ‘Federico II’. He has been Visiting Researcher at the MPIL - Heidelberg and at the IDEIR - UCM Madrid. He received the AISDUE award for the best doctoral thesis in EU Law (Italian Association of EU Law Scholars, 2021). He is the author of the monograph ‘Il valore dello Stato di diritto nell’Unione europea. Violazioni sistemiche e soluzioni di tutela’ (‘The Rule of Law in the European Union. Systemic violations and protective solutions’ – Naples, Editoriale Scientifica, 2023, 449 pages). He is qualified for the position of Associate Professor in EU Law in Italy.

SUGGESTED CITATION: Circolo, A.; “Tough times for (non-)courts! Yet another declaration of inadmissibility of a request for a preliminary ruling by the CJEU: NADA case”, EU Law Live, 10/06/2024, https://eulawlive.com/op-ed-tough-times-for-non-courts-yet-another-declaration-of-inadmissibilityof-a-request-for-a-preliminary-ruling-by-the-cjeu-nada-case/

Safeguarding EU Law’s Authority: The General Court affirms the Commission’s Decisions to recover Penalty Payments from Member States by offsetting (T-200/22 and T-314/22, Poland v Commission)

Pekka Pohjankoski

A Story of Mining, Noncompliance, and Money

The General Court has recently decided a case of considerable significance for the enforcement of EU law. On 29 May, it upheld the decisions of the Commission to recover by offsetting penalty payments of close to EUR 70 million, which had been imposed on Poland to bolster interim measures previously ordered in the ‘Turów mine’ case (C-121/21, Czechia v Poland). Already prior to their offsetting, these penalty payments have been a thorn in the side of the (previous) Polish government headed by PM Morawiecki, who indicated early on that Poland would ‘of course not … stop mining’, as required by the Court, and would fight the penalty payments and their recovery ‘with all legal means’ (see his interview here).

Considering the government’s posture, it was unsurprising that Poland subsequently brought two actions before the General Court, registered as Joined Cases T-200/22 and T-314/22 (for other still pending cases, see P. Pohjankoski, ‘Contesting the Ultimate Leverage to Enforce EU Law’, here). These actions represent the first time that a Member State has judicially challenged the Commission’s decision to recover by offsetting penalties ordered in the context of an infringement procedure. Insofar as they concern the very capacity of the EU to ultimately secure the authority of financial penalties imposed on Member States, they merit close attention.

The Commission’s Offsetting Decisions

The background to the General Court’s judgment is the by-now-settled ‘Turów mine’ case, in which Czechia brought an inter-state infringement action, under Article 259 TFEU, against Poland arguing that the open-cast mine near the Polish-Czech border jeopardized the groundwater supply on the Czech side (see T. Shipley, ‘The Turów mine dispute between Poland and the Czech Republic and the future of inter-State cases before the Court of Justice’, here). Claiming breaches of various EU environmental rules, Czechia requested the Court of Justice to order Poland to halt the mining activity pending final judgment, a request which the Court granted in a first interim order on 21 May 2021.

No compliance followed, however. Czechia then asked the Court of Justice to bolster the interim measures by imposing on Poland a daily penalty payment of EUR 5 million [sic!]. On 20 September 2021, the Vice-President

of the Court issued a second order, holding that it was ‘unequivocally clear’ that Poland had not complied with the previous order, and ordering, by virtue of Article 279 TFEU, a penalty payment of EUR 500,000 on Poland for every continuing day of noncompliance with the initial order. Eventually Czechia and Poland settled the dispute out of court, following which the case was removed from the Court’s register (on developments before national courts following that settlement, see here). However, until this removal on 4 February 2022, the daily penalty payments had resulted in a total sum of EUR 68 500 000.

The Commission, having first requested payment from Poland by letter, next sent a formal notice indicating the total amount due with interest and indicated that, if payment were not made, it would proceed to recover the debt by set-off. The legal basis for recovery by offsetting is Articles 101(1) and 102 of the Financial Regulation 2018/1046. The penalties would thus be set off against the various amounts owed to Poland from the EU budget. Poland retorted that the Commission should discontinue the enforcement proceedings since the case had settled. The Commission for its part disagreed, maintaining the amount which had accrued until the date when Czechia withdrew its claims constituted a recoverable debt.

General Court: Confirming the Commission’s Powers

Before the General Court, the stakes were potentially very high, even if Poland did not explicitly contest, as a matter of principle, the Commission’s powers to recover debts from Member States by offsetting. Instead, Poland claimed, first, that the Commission had exceeded its powers under the Financial Regulation in proceeding to recovery though the Turów mine case had settled. Secondly, Poland contended that the Commission had not provided sufficient reasons for its decisions, which made it impossible to understand why the interim-measurebased penalty payments were recovered despite the settlement. Thus, while the claims concerned the effects of the out-of-court settlement on the recovery, the outcome sought by Poland – namely a ruling finding the Commission’s recovery decisions illegal – was, in effect, to defeat the efficient enforcement of the penalty payments.

These narrowly formulated claims implied that the General Court was not obliged to undertake a principled assessment of the Commission’s powers to recover debts by offsetting. That said, the judgment noted at the outset that penalty payments ordered in support of interim measures have as their purpose ‘to guarantee the effective application of EU law …[,] an essential component of the rule of law’ (para 32), and are not to be characterized as ‘a penalty’ but as an ‘instrument of a coercive nature’ (para 33). Referring to Article 160(1–2) of the Rules of Procedure of the Court of Justice, the General Court inferred that the removal of the Turów mine case from register had not extinguished Poland’s obligation to pay the penalty payments relating to the period prior to that removal. This was in line with the penalty payments’ purpose which was to secure compliance with the interim measures and to deter a Member State from delaying its compliance (para. 47).

Interestingly, the General Court referred, in paragraph 48 of the judgment, to Poland’s conduct as ‘deliberately failing to fulfil the obligation to comply with the interim measures ordered’ (emphasis added). This is very strong –if fully justified – language. While the General Court’s task to find that the Commission did not exceed its powers in recovering a relatively clear-cut debt owed to the EU was not very difficult per se, the judgment is significant in

that it confirmed the Commission’s powers to enforce EU law in the face of a Member State’s deliberate breaches. Such deliberate noncompliance constitutes a violation of the rule of law par excellence. The Commission should be able to effectively recover any coercive penalty payments which have been ordered in support of interim measures while compliance with the latter is not forthcoming. As for the allegedly insufficient reasoning of the contested decisions, the General Court found the reasoning advanced by the Commission adequate and could easily dismiss the claim.

Conclusion: Constitutional Implications of Offsetting

Offsetting touches on the sensitive domain of the enforcement of EU law against Member States. Taking a step back, it is apparent that the power to recover debts by offsetting is, in the context of infringement procedures, much more than budget technique. As is well known, the EU has limited powers of enforcement over its Member States; the Union has no army, no police force, and few enforcement agents. Hence ‘softer’ forms of coercion, such as penalty payments, are relied upon. Crucially, however, such penalties are only effective if they themselves can ultimately be recovered. This was the crux of the problem underlying Poland’s challenge to the Commission decisions.

Outside the context of judicially ordered penalty payments, offsetting – even with regard to Member States – is a well-established phenomenon (see eg Greece v Commission, C-203/07 P). The case-law has alluded to offsetting as a ‘method of extinguishing reciprocal obligations’ – as opposed to a ‘means of execution’ – meaning that offsetting may not be ‘enforcement’ stricto sensu (see AG Léger in Commission v CCRE, C-87/01 P). Indeed, conventional enforcement against Member States is difficult both in law and in fact (see, to this effect, AG Jääskinen in Commission v Portugal, C-292/11 P).

It is precisely because of the EU’s limited coercive powers against Member States that safeguarding the Commission’s offsetting powers is primordial. In practice, this power provides essential leverage to secure the effectiveness of EU law because it allows recovering penalty payments without being defeated by the difficulties encountered in conventional enforcement of obligations against states (see P. Pohjankoski, ‘Rule of Law with Leverage: Policing Structural Obligations in EU Law with the Infringement Procedure, Fines, and Set-off’, here).

Finally, the General Court’s finding that the removal of an infringement case from the register does not extinguish the penalty payments ordered during the main proceedings is, while perhaps unsurprising, eminently sound. Penalty payments are compulsory and cannot be disposed of by the parties in their settlement agreement. The judgment correctly highlights that the rationale of the judicially ordered penalties is to coercively ensure compliance, to deter violations, and to safeguard the authority of the rulings of the Court of Justice. By extension, then, recovering such penalties by set-off is conducive to guaranteeing the authority of EU law itself.

Pekka Pohjankoski is a Researcher at the Faculty of Law, University of Turku (Finland)

SUGGESTED CITATION: Pohjankoski, P.; “Safeguarding EU Law’s Authority: The General Court affirms the Commission’s Decisions to recover Penalty Payments from Member States by offsetting (T-200/22 and T-314/22, Poland v Commission)”, EU Law Live, 11/06/2024, https://eulawlive. com/op-ed-safeguarding-eu-laws-authority-the-general-court-affirms-the-commissions-decisions-to-recover-penalty-payments-from-member-statesby-offsetting-t-200-22-and-t-314-2/

Balancing Competence and Accountability: Authority’s dual Role in Disciplinary Proceedings ( T-766/22, Canal Ferreiro v. Council)

María Casado García-Hirschfeld

In the present case, T-766/22 (judgment of 29th May 2024), the Applicant has brought an action under Article 270 TFEU, seeking the annulment of the Council of the European Union’s administrative investigation, the Council’s investigation report, the Council’s decision imposing a disciplinary penalty of reprimand, and the decision of 1st September 2022, rejecting her complaint.

In support of her action, the Applicant puts forward four pleas in law: 1) the contested decision does not contain any statement of reasons relating to the facts constituting the infringement of article 21 of the Union’s Staff Regulations; 2) in any event, the infringement of Article 21 of the Staff Regulations has not been established; 3) the contested decision does not contain any statement of reasons indicating what was the ‘disparaging communication’ contrary to Article 12 of the Staff Regulations; 4) in any event, the infringement of Article 12 of the Staff Regulations has not been established.

This ruling is a good illustration of two of the issues that most concern people who have been the subject of a disciplinary sanction. One is the competence and responsibility of the author of the decision to impose the sanction and review it following a complaint’s procedure, and the other is the motivation behind the sanction to review its legality.

In my experience as a lawyer, one of the first questions a client asks when preparing to bring an action for annulment before the Court of Justice is whether it is lawful for the administrative authority which imposed the sanction, and therefore the author of the contested administrative decision, also to be responsible for the analysis of a complaint lodged under Article 90(2) of the Staff Regulations.

In such cases, where it is the very same authority that has the power of decision and then the power of review its decision, there is a legitimate perception that the Appointing Authority cannot play the role of ‘judge and party’ in disciplinary proceedings, being at the same time the author of the sanction and the reviewer of the complaint. Such situations are perceived by the persons concerned as a lack of impartiality, that raise serious doubts as to whether the fundamental right to good administration may be being infringed.

In the present judgment, the General Court relies on very old case-law and the Opinion of the Advocate General which led to a judgment in the 1980s, Vecchioli v. Commission, 101/79, to reaffirm that an action based on Article 90(2) is not an appeal. It is primarily intended to force the Appointing Authority to review its decision in the light of the claimant’s submissions.

More recent case law adds that, the aim of the administrative complaint’s procedure is to enable and encourage an amicable settlement of the dispute that has arisen between the complainant and the competent authority (Z v Court of Justice, T-88/13 P, para. 144).

In other words, the competent authority must review its decision in an impartial manner, even though it is the same authority that issued it. In support of its conclusion, the General Court recalled that the will of the legislator does not imply that an authority which is the author of a decision imposing a sanction on an official is precluded from carrying out a review in the event of an administrative complaint by the person concerned.

The General Court therefore concludes that there can be no violation of Article 41(1) of the Charter merely because the decision rejecting the complaint was taken, in accordance with the internal organisational rules of an institution, by the same person who had taken the decision which was the subject of the complaint.

This conclusion invites me to make the following considerations. On the assumption that the complaint’s procedure is interpreted by the General Court as allowing the claimant to clarify his allegations and the administration to correct any errors, reconsider its position and supplement the reasons for the contested decision, there is nothing that could prevent the EU institutions from making use of the possibilities offered by the Staff Regulations to improve this procedure in order to ensure that these objectives are achieved.

Under Article 2 of the Staff Regulations, each institution determines the authorities which exercise within it the powers conferred on the appointing authority by the Staff Regulations.

Therefore, and provided that the legislator does not prohibit it, EU institutions could eventually prevent such situations in which the administrative authority adopts a decision and it is the same person who reviews it in the event of a complaint, either by delegating its authority to a hierarchical superior of the author of the decision or simply by calling upon an independent mediation service capable of assisting the parties in resolving their dispute where possible.

This last point is relevant because the judge recalls the possibility of an amicable settlement in case law more recent than the one cited in the judgment in question. Indeed, case law recalls that the aim of the administrative complaint procedure is to enable and encourage an amicable settlement of the dispute that has arisen between the complainant and the competent authority (Z v Court of Justice, T-88/13 P, para. 144), which I believe could be equated to a mediation process.

My legal experience has shown me that in very few cases it is possible to reach an amicable agreement, and in most cases, it is because the administration does not even consider it.

Some will immediately think of the European Ombudsman. However, the figure of the mediator is not fully comparable to that of the European Ombudsman, who can only intervene if the person requesting his services has completed the pre-litigation stage, i.e. the procedure provided for in Article 90(2), and has not simultaneously lodged an appeal with a judicial body.

Therefore, under no circumstances may the person concerned or the institution itself have recourse to the services of the Ombudsman before the conclusion of the complaint procedure.

The practice of the mediation, which is founded on the independence and impartiality of the mediator, contributes to helping the parties themselves to resolve their differences in their best interests. A further proposal would be to outsource a mediation service and create an inter-institutional body, on the lines of the United Nations Ombudsman, a team of conflict resolution experts committed to improving the way all United Nations staff work together.

Finally, the decision imposing a reprimand on the applicant was annulled by the General Court on the ground that there was a breach of the obligation to state reasons inasmuch as the decision it lacked details of the facts complained of, which prevented the General Court from reviewing the validity of the contested decision. The General Court dismissed the remainder of the application.

María Casado García-Hirschfeld is a lawyer registered at the Bars of Madrid and Brussels. She is the Director of the National University of Distance Education (UNED) associated center in Brussels.

SUGGESTED CITATION: Casado García-Hirschfeld, M.; “Balancing Competence and Accountability: Authority’s dual role in disciplinary proceedings ( T-766/22, Canal Ferreiro v. Council)”, EU Law Live, 14/06/2024, https://eulawlive.com/op-ed-balancing-competence-and-accountability-authoritysdual-role-in-disciplinary-proceedings-t-766-22-canal-ferreiro-v-council/

Differentiated Regional Rates of Excise Duties on Energy Product within a Member State are not authorised: DISA (C-746/22)

Sébastien Wolff

On 30th May 2024, the Court of Justice delivered its judgment in the case C-743/22, DISA Suministros y Trading SLU (DISA) v. Agencia Estatal de Administracion Tributaria. This case concerned the interpretation of Council Directive 2003/96/EC (the ‘Energy Taxation Directive’), which restructured the Community framework for the taxation of energy products and electricity, specifically regarding differentiated regional rates of excise duties within a Member State.

DISA, a Spanish company, contested the imposition of a regional excise duty on mineral oils in addition to the national rate, arguing it contravened the Energy Taxation Directive. The Tribunal Supremo (the Supreme Court of Spain) referred the matter to the Court of Justice under Article 267 TFEU for a preliminary ruling. The purpose of the ruling was to clarify whether, irrespective of compliance with the minimum levels of taxation required by the Energy Taxation Directive, that directive requires that a uniform level of taxation applies throughout the territory of a Member State, or whether the directive affords the Member States some leeway to provide for different rates of excise duty for the same product and the same use, depending on the part of the national territory in which that product is intended to be consumed.

The question relates to the interpretation of Articles 5 and 18 of the Energy Taxation Directive allowing Member States to discriminate similar products based on their intrinsic properties or on their final use, but also of Article 1 of Directive 2008/118 providing a general framework for excise taxation at the EU level (this Directive has been since repealed by a Directive 2020/262). It shall be recalled that Energy Taxation Directive only partially harmonises taxation of energy products and electricity and that the directive affords the Member States a degree of flexibility to be able to implement national policies, for instance by imposing only a minimum level of taxation.

Article 5 of the Energy Taxation Directive allows for differentiated rates under specific conditions, which includes a discrimination based on the product quality, or between business and non-business but mandates that these duties must adhere to minimum levels set by the directive. The Court of Justice states in this respect that the Article 5 ‘does not provide Member States with the possibility to set different rates of excise duty for the same product and the same use depending on the region or territory of that Member State in which that product is consumed’ (para. 39). A reference to the preparatory works for Directive 2003/96 supports the interpretation that the EU legislature intended to create a strictly circumscribed framework in which differentiated rates of taxation may be provided for the same product.

The Court does not further support the argument that the neighbouring Portugal is authorised to apply levels of taxation on energy products and electricity consumed in the Autonomous Regions of the Azores and Madeira

lower than the minimum levels of taxation laid down in that Directive based on Article 18 of the Energy Taxation Directive, like similar other insular areas in other Member States. The purpose of Article 18 has always been to consider specific geographical peculiarities of those territories of Member States, rather than introducing for each Member State a possibility of applying different rates between its regions for the same product and the same use, without any limit or supervisory mechanism. The Court of Justice emphasises that such a prerogative ‘would be likely to impair the proper functioning of the internal market by fragmenting it further, thus jeopardising the free movement of goods’(para. 55). That interpretation is consistent with the objective of the Energy Taxation Directive to support the proper functioning of the internal market in the energy sector, in particular by avoiding distortions of competition, and a settled case law of the Court (Cristal Union, C-31/17; Autoservizi Giordano, C-513/18).

The Spanish government argues also that a regional rate of excise duty on mineral oils may be classified as another indirect tax within the meaning of Article 1(2) of Directive 2008/118. This article authorises the collection of other indirect taxes on excise goods, for specific purposes. The Court required in this respect to establish a link between the use of the revenue and the specific purpose of the tax in question (Case C-82/12, Transportes Jordi Besora, Case C-553/13, Statoil Fuel and Retail, Case C-833/21, Endesa). In the absence of a predetermined allocation of revenues, the tax would be recognised as pursuing a specific purpose only if it is designed, so far as its structure is concerned, and particularly the taxable item or the rate of tax, in such a way as to guide the behaviour of taxpayers in a direction which facilitates the achievement of the stated specific purpose (Case C-82/12, Transportes Jordi Besora, Case C-833/21, Endesa).

The Court of Justice gives then a crucial importance on the way the policy objective is fulfilled by levying a tax and how this purpose is distinct from budgetary considerations. No additional preoccupation than a repartition of tax power between the central State and the autonomous communities seems to percolate from the Spanish provisions, this last aspect to be analysed by the national court based on the case facts.

In the light of the foregoing statements from the Court, it must then be concluded that neither the Energy Taxation Directive nor the General Arrangement Directive for excise duties authorises regions or autonomous communities to set different rates of excise duty for the same product and the same use depending on the territory in which the product is consumed, where there is no other objective than to share tax power and revenues.

Sébastien Wolff is a post-doctoral researcher and guest lecturer at the Catholic University of Louvain, a lecturer at the University of Lorraine and a lecturer at the ICHEC Brussels Management School.

SUGGESTED CITATION: Wolff, S.; “Differentiated regional rates of excise duties on energy product within a Member State are not authorised: DISA (C-746/22)”, EU Law Live, 12/06/2024, https://eulawlive.com/analysis-differentiated-regional-rates-of-exciseduties-on-energy-product-within-a-member-state-are-not-authorised-disa-c-746-22/

SYMPOSIUM

SYMPOSIUM ON THE 20th ANNIVERSARY OF THE ‘GREAT’ EU ENLARGEMENT

20 Years of the ‘new’ Member States in the EU’s Common Commercial and Foreign Policy: Reflecting on Practical Examples

Nicolaj Kuplewatzky

Enlarging the European Union is more than the territorial expansion of European membership rights and obligations to other States and peoples. It is part of the process of forming ‘an ever closer Union’ of the common values enshrined in Article 2 TEU. That values-based model is now more topical than ever: geopolitics is back, as priorities have shifted from a world shaped by bilateral and multilateral trade agreements to one where levers of power, the alignment of values, and hence fragmentation inherently dominate the trade sphere.

Upon accession in 2004, the ‘new’ Member States brought their own relationships, objectives, and priorities to the trading table. Without the ambition of completeness, I shall offer three examples of how those ‘new’ voices played out in the European Union’s common commercial and foreign policy.

The first area is trade defence remedies (anti-dumping, anti-subsidy and safeguard measures). While the European Union has long been one of the main users of trade remedies, only four out of the ten ‘new’ Member States had resorted to the imposition of anti-dumping duties prior to accession (that is, Czechia, Latvia, Lithuania and Poland) (see Sandkamp, p. 17). Malta had no laws or regulations in place to tackle injurious trade practices (see G/ADP/N/1/EEC/2/Suppl.6, p. 3). Upon accession on 1 May 2004, any on-going investigations and measures taken by those States lapsed as the European Union’s existing trade defence measures were automatically extended to the (then) EU-25 (see the 2004 Annual Report on the use of Anti-Dumping, Anti-Subsidy and Safeguard Measures, COM(2005) 360 final, p. 3). In preparation for those changing times, the Commission had involved ‘the representatives of the acceding countries … as active observers in the work of the Anti-dumping and Antisubsidy Advisory Committees’ (see the Annex to COM(2005) 360 final, Section 3), while a special task force of DG TRADE evaluated proposals for transitional measures to ensure traditional trade flows to the ‘new’ Member States in order to cushion the effects of the newly-extended measures, such as through ‘enlargement reviews’ (see the Annex to COM(2007)171 final, Section 3 respectively).

That transitional phase passed quickly. Already in 2005, the Polish Freezing Industry Union requested the initiation of a safeguard investigation into frozen strawberries, which, although ultimately terminated, arguably led to antidumping measures on the same product in 2007. Now mostly forming part of the ‘liberal’ voting block in the Working Party on Trade Questions and the Trade Defence Instruments Committee, during the negotiations on TDI Modernisation (the first major overhaul of the EU’s trade defence instruments since 1995), a number of ‘new’ Member States played a pivotal role in maintaining, at least generally, the application of the ‘lesser-duty rule’ in anti-dumping and anti-subsidy investigations to better balance EU producer interests with those of EU users

and other downstream industries (see Ministry of Foreign Affairs of the Netherlands, IOB evaluation, Nr. 442 p. 74.) [The ‘lesser-duty rule’ is used by the Commission to moderate the effects of trade defence measures and so mandates that that institution imposes duties only up to the level necessary to remove injury to EU producers of the product under investigation—as opposed to the (sometimes far higher levels) of dumping/subsidisation found in that product.]

Second, China’s 2021 imposition of economic restrictions on Lithuanian products and companies (after Taiwan opened what China viewed as a ‘de-facto embassy’ in Vilnius) led to the realisation that the European Union was missing a policy tool to respond to the weaponisation of economic dependencies. [That incident also resulted in the European Union filing a WTO case, China – Measures Concerning Trade in Goods (DS610), for which the Union requested a suspension of proceedings in January 2024.] The resulting policy search triggered the Commission’s announcement of (what is now) the Anti-Coercion Instrument. Forming part of the steady shift from a rules-based to power-based international trade order, that measure seeks to deter third countries from targeting the European Union and the Member States with economic coercion through measures affecting trade or investment (such as through the imposition of tariffs, restrictions on trade in services, or restrictions on access to foreign direct investment). As part of the same reorientation (and recalibration), Czechia, Estonia, Cyprus, Malta, Latvia and Slovakia reportedly also formed part of the block to force the Commission to amend its proposal for (what ultimately became) the International Procurement Instrument—the first investigation pursuant to which was commenced in late April 2024 into China’s ‘serious and recurrent impairment of access of Union economic operators’ to that country’s medical devices market.

Third, even more recently, the ‘new’ Member States have begun actively shaping the European Union’s Common Foreign and Security Policy. By reason of their physical distance to Russia, and well acquainted with that country’s current political philosophy of ‘might makes right’ (see, in that context, Rihard Kols in the 2023 Latvian Foreign and Security Policy Yearbook, p. 20), Estonia, Latvia, Lithuania, and Poland reportedly pushed for tougher EU sanctions measures early on during the continuing war of aggression against Ukraine (such as on trade in uranium and other civil nuclear cooperation). Moreover, until Council Decision 2020/1999, the same Member States arguably led the Member States’ sanctions policies with ‘Magnitsky-type’ measures to target general human rights abuses and corruption (named after the Russian whistleblower Sergey Magnistsky who died in pretrial detention), even before the European Parliament had called for such measures. With the economic and social repercussions of the Russia-Ukraine war unfolding, the ‘new’ Member States have also begun leveraging the unanimity rule of Article 29 TEU, with some reportedly demanding, in the discussions surrounding a possible reform of its use, the need to protect vital national interests.

Further evidence of the ‘new’ Member States impacting EU trade (and foreign) policy is still taking shape: with Bulgaria, Hungary, Poland, Romania and Slovakia having already forced the Commission to act through a regional safeguard measure on a glut of imports of wheat, maize, rapeseed (colza) and sunflower seeds arising from the war on Ukraine (see Regulation (EU) 2023/1100), in March 2024, Latvia proceeded to prohibit the importation of

certain agricultural and feed products from Russia and Belarus into its territory, with Poland publicly considering to follow suit. The Commission’s proposal for EU-wide measures to prevent a serious disturbance on the market (as foreseen under Article 32(d) TFEU) followed soon after, and was adopted by the Council on 30 May 2024. This latest development may be exemplary of the overall nuanced approach that the ‘new’ Member States have taken regarding the European Union’s common commercial and foreign policy: advancing, from within, a policy of common values while nevertheless ensuring the protection of important national objectives and priorities.

SUGGESTED CITATION: Kuplewatzky, N.; “20 years of the ‘new’ Member States in the EU’s common commercial and foreign policy: reflecting on practical examples”, EU Law Live, 14/06/2024, https://eulawlive.com/op-ed-20-years-of-the-new-member-states-in-the-eus-common-commercial-andforeign-policy-reflecting-on-practical-examples/

Nicolaj Kuplewatzky is Référendaire in the Chambers of Advocate General Ćapeta at the Court of Justice of the European Union

Enlargement of the EU and the Euro: Challenges for Future Member States

Phedon Nicolaides

Introduction

Within ten years of their accession to the European Union, seven of the ten countries that joined in 2004 succeed to adopt the euro as their currency. Only the Czech Republic, Hungary and Poland have remained outside the monetary union. Of the remaining three countries that joined later in 2007 & 2013, Croatia also managed to comply with the Maastricht convergence criteria and to adopt the euro in 2023.

The fact that all newer Member States were less prosperous than the older Member States did not appear to be an insurmountable obstacle to their entry into the monetary union. The consequences, however, of having a common currency and no control over monetary policy can be dire in times of economic upheaval. The financial crisis that broke out in 2008 and then morphed into sovereign debt crisis brought close to default five Member States of which only one had joined in 2004. This is corroborating evidence that sound economic policies are more important than income levels when different countries share the same currency.

All countries that aspire to accede to the EU in the future are also less prosperous than the average Member State. But the experience with the EU’s monetary union demonstrates instead that if a country gives up its own currency and relinquishes monetary policy to a supranational institution such as the European Central Bank, then it needs to have a competitive and flexible economy and sustainable public finances.

This is the first important lesson that future Member States should draw from the experience with the monetary union since its creation in 1999. They will have to improve their economies and the management of their public finances.

The Member States in the euro area have also, rather belatedly, established the means for mutual assistance in case of crises. The setting up of the European Stability Mechanism was controversial (see the arguments in case C-370/12, Pringle), but it succeeded to help five Member States to overcome their debt problems. It was the conditions that were attached to the ESM financial assistance that proved to be even more controversial.

And here lies the second most important lesson for future Member States. They will not be alone in case of need. There will be help. But, help will be politically painful and socially costly. Mutual assistance is granted only on condition that extensive economic, institutional and legal reforms are undertaken by the beneficiary country.

In fact, successful membership of the monetary union entails that reforms are undertaken before accession to the EU. The rest of this article examines what will have to be done by the candidate countries in their preparation for accession.

Conformity with EU law

The accession of a country to the EU is preceded by lengthy and detailed negotiations. Their purpose, according to Article 49 TEU, is to determine ‘[t]he conditions of admission and the adjustments to the Treaties on which the Union is founded’. Indeed, with every enlargement, the EU has had to do a certain minimum adjustments to its Treaties by, for example, increasing the number of members of the European Parliament. However, most of the adjustment falls on the applicant country. In this sense, the word accession ‘negotiations’ is a misnomer. In practice they are more like entrance examinations. The applicant country has to reform its laws, policies and administrative structures to conform with EU law or as used to be called the ‘acquis communautaire’.[1]

Convergence: Precise thresholds, subjective assessment

Article 3(4) TEU which defines the objectives of the EU states that ‘[t]he Union shall establish an economic and monetary union whose currency is the euro’. According to Article 119(2) TFEU, the activities of the Union and Member States ‘shall include a single currency, the euro’. It follows that the euro is the currency of all Member States. It is very unlikely that any future Member State will be able to secure the same opt-out as that which was granted to the UK or Denmark in 1991 and 1992, respectively. The consent of those two countries was needed for agreement on the Treaty of Maastricht. Any new Member State will not have the same bargaining power.

What is more likely to happen at forthcoming enlargements of the EU is that new Member States will be designated as ‘Member States with a derogation’. They will remain in derogation as long as the Council considers, under Article 139 TFEU, that they do not ‘fulfil the necessary conditions for the adoption of the euro’. As Member States with a derogation, they will have to conduct their own monetary policy, issue their own money, manage their exchange rate and will not be subject to the coercive parts of the excessive deficit procedure under Article 126 TFEU. But they will have to conform with all the other rules concerning public spending, public debt and correction of macroeconomic imbalances.

Moreover, they will have to put their economies on a convergence path so as to be able to ‘fulfil the conditions for the adoption of the euro’. In this respect, they will be subject to period assessment by the Commission and the European Central Bank [ECB] on their progress. The periodic assessment will examine the conformity of their legislation on monetary issues and institutions, especially on the independence of the central bank which, once the new Member States adopts the euro, will participate in the Governing Council of the ECB.

Whether the conditions are right for the adoption of the euro will be determined according to the convergence criteria laid down in Article 140 TFEU. They are:

Price stability: The rate of inflation must not be higher than 1.5 percentage points than the average rate of the best three euro Members.

Convergence of interest rates:

Interest rate must not be higher than 2 percentage points than the average rate of the best three euro Members.

Sustainability of government finances: Absence of excessive budget deficit [Article 126 TEFU]. Public debt should not exceed 60% of GDP. However, Protocol 13 on the convergence criteria provides that if the deficit exceeds the 3% threshold, it must have ‘declined substantially and continuously and reached a level that comes close to the reference value; or, alternatively, the excess over the reference value is only exceptional and temporary and the ratio remains close to the reference value’. In addition, if public debt exceeds the 60% threshold, it must be ‘sufficiently diminishing and approaching the reference value at a satisfactory pace’.

Exchange rate stability: Participation in the exchange rate mechanism for at least two years without any devaluation.

When the euro was established in 1999, several Member States had deficit and debt values exceeding the Treaty thresholds. In subsequent enlargements of the euro zone, some new Members also exceeded the thresholds. In all cases, they were deemed to have declined substantially or to be sufficiently diminishing. Therefore, the assessment of whether the convergence of future Member States will be durable will depend also on subjective elements. This is even more so because Article 140 TFEU further stipulates that ‘[t]he reports of the Commission and the European Central Bank shall also take account of the results of the integration of markets, the situation and development of the balances of payments on current account and an examination of the development of unit labour costs and other price indices.’

At the same time the example of Sweden, which carried out a referendum in 2003 with a negative result, suggests that no country will be forced to adopt the euro against the wishes of its citizens, even if formally it complies with all the convergence criteria. The case of Denmark is also instructive in this respect. Despite the fact that Denmark enjoyed an opt-out from the obligation to adopt the euro, it too carried out a referendum in 2000 proposing to citizens to join the euro area. The government was wholeheartedly behind membership of monetary union. However, the proposal was defeated by a small margin. But, it was sufficient to stop the Danish government from proceeding against the wishes of its electorate.

Therefore, entry into the euro area will not take place at the same time as accession to the EU of new Member States. They will be designated as Member States with derogation, will have to steer their economies towards converge with the euro area and will have to wait until both economic and domestic political conditions are right before adopting the euro.

New monetary environment

Future Member States, like existing Member States, will encounter something that does not exist today: The digital euro. This will be a form of digital currency, like the credit or debit cards issued by banks, but backed by the ECB. Unlike other privately-issued digital money, the digital euro will be a safe asset.

In June 2023, the Commission proposed legislation for the establishment of a digital euro (COM(2023) 369 final). The ECB delivered its positive opinion on the proposal in October 2023. However, the ECB also expressed concern that the legislation underpinning the digital euro ought not to interfere with its independence and this exclusive competence in deciding when to issue the digital euro and its intrinsic technical features.

The specific features of accounts that will hold the future digital euro are still being debated. An issue which is still unresolved and is likely to affect future Member States is a possible limit on the amount of digital euro that may be held in any individual account; the so-called ‘holding limit’. This is because the safety of the digital euro could destabilise commercial banks. For example, in case a bank encounters financial difficulties, depositors would have a strong incentive to shift their money to digital euro accounts. That would precipitate the collapse of the bank. Consequently, digital euro accounts will have to be subject to rather low holding limit. At the same time, however, the holding limit should not be too low as to make such accounts impractical. The point, however, is that, given that all prospective Member States, and some current Member States, are relatively poorer than the EU average, the level of the holding limit of digital euro accounts may have significant implications for their banking systems and for the transmission of the single monetary policy in their economies.

The digital euro is one of the unknowns that will have to be negotiated in future accessions to the EU.

Conclusions

Future Member States will have to adopt the euro when they satisfy the convergence criteria after they accede to the EU. Their convergence will be assessed on the basis of both hard quantitative and soft qualitative criteria. Successful membership of the monetary union will depend on competitive and flexible economies and sustainable public finances. How a future digital euro may impact on their economies is still unknown. Ultimately, however, they will have to persuade their citizens that they will be better off by having the euro as their currency.

Phedon Nicolaides is Professor at the University of Maastricht and at the University of Nicosia.

[1] See P. Nicolaides, Enlargement of the EU and Effective Implementation of EU Rules, (Maastricht: European Institute of Public Administration, 2000); P. Nicolaides et al, A Guide to the Enlargement of the European Union (II): A Review of the Process, Negotiations, Policy Reforms and Enforcement Capacity, (Maastricht: European Institute of Public Administration, 1999); P. Nicolaides and S. Raja Boean, A Guide to the Enlargement of the European Union: Determinants, Process, Timing, Negotiations, (Maastricht: European Institute of Public Administration, 1997).

SUGGESTED CITATION: Nicolaides, P.; “Enlargement of the EU and the Euro: Challenges for Future Member States”, EU Law Live, 12/06/2024, https://eulawlive.com/op-ed-enlargement-of-the-eu-and-the-euro-challenges-for-future-member-states/

Enlargement of the EU since 2004: some Experiences from the UK before Brexit

Catherine Barnard & Fiona Costello

Although the expansion of the EU has been an ongoing process since its inception, the 2004 enlargement was the greatest single expansion, with ten countries joining the EU, including eight from central and Eastern Europe (‘A8’). The UK, Ireland and Sweden were the only countries which opened their labour markets immediately to workers from these new Member States. This meant that around 70% of migrants from the A8 headed for Ireland and the United Kingdom

Following the introduction of the EU Settlement Scheme (EUSS), as part of the UK’s post Brexit arrangements, we now have a clearer idea of how many EU migrants came to the UK. More than 6 million EU free movers (EU27) have received either settled or pre settled status in England. Of these 6 million applications almost 2 million are nationals from these ten new Member States 2004 (as of end of March 2024, see Fig 1). The subsequent accession of Romania and Bulgaria (‘A2’ countries) in 2008 has added a further 1.5 million applications. This means that more than half of those who exercised their free movement rights came from the 2004 and 2008 States. In many ways these numbers are an important indicator of the success of the internal market and its free movement pillar.

Fig 1- (UK) Concluded Applications: Outcome Type: Settled (SS) and Pre Settled Status (PS) by Nationality, August 2018- March 2024 more here

So, what have their experiences been? On the one hand there are the ‘Eurostars’, to use language from Favell, those more mobile seeking a cosmopolitan and post national borderless Europe who (mostly) have access to the rights and protections afforded by free movement – the right to equal treatment and to access support if needed (welfare benefits). On the other hand, there is another group – and the group our work focuses on – namely EU migrants doing low paid and low skilled work in (rural) England, most of whom came from the A8 and A2 countries, to whom much less attention has been paid. While for the first group, free movement does generally represent ‘an enormous enrichment of personal freedoms of citizens and societies’, for the second group, as we show in our book ‘Low Paid EU Migrant Workers, the House, the Street, the Town’, their experience is one of precarity and vulnerability. Our research therefore tells an uneasy truth – that the benefits of the internal market can be unevenly spread amongst its citizens.

Our book is the product of four years research in the town of Great Yarmouth in Norfolk, a town which has seen significant EU migration, manly from Lithuania and Poland but also Portugal and Romania. The book examines the lives of 8 migrant workers living in an HMO (house of multiple occupation), all from Latvia and Lithuania, as well the lives of about 1,400 EU nationals who have sought access to help from a local advice charity in Great Yarmouth, GYROS, almost all of whom arrived in the UK after 2004. It details many aspects of the experiences of EU nationals who moved to Great Yarmouth: work, housing, welfare benefits, debt, health. It also examines how the many problems they face are resolved.

Our work shows that this group of EU nationals are experiencing significant clustering of (legal) problems and, due to precarity (of work, of housing, of income, debt issues), are unable to address those issues by enforcing their rights via traditional legal mechanisms, for example by seeking advice from a solicitor, let alone bringing a claim in an employment tribunal. Apart from issues around language (the majority of those featured in our research were non-English speakers), there are issues around the cost of enforcing rights. Take for example the case of Adi* seeking help to receive payment for the work he had undertaken:

Client has been advised at the CAB to come to GYROS for us to help him write the letter to his employer requesting for wages to be paid. I asked the client why CAB didn’t help him with the letter, he explained that he did not understand because of the language barrier. Client was under a lot of stress and overwhelmed that he couldn’t get the help he needs so far, and that his dishonest employer will get away with not paying him. [Lithuanian, male, lorry driver]

Poor working conditions are also commonly reported by those we speak to in our research. For example, many EU-8 nationals speak about routine refusal of toilet breaks when working in food processing factories:

Client explained he asked for a toilet break but was told by his supervisor to wait until breaktime, when the client asked again, he was told he can go, but doesn’t need to come back. [Polish, male, food processing factory]

In fact, the client was sent home that day by the agency’s site manager, because he asked for a toilet break. The next day the client sought help from GYROS. GYROS called the agency and following this, the client did return to work, switching to the night shift so he would not have to work with the supervisor again. Although the client

was advised by GYROS to come back if he wanted assistance to contact his union, it is unclear if this took place. It may be, as in many of the case notes and in discussion with the caseworkers, that clients ‘choose’ to continue to work rather than enforce their rights.

We uncovered similar issues with housing:

Client complained about her landlord, as he does not give her any tenancy agreement and now the landlord is complaining about the children, [saying] that she needs to keep them quiet, and she feels that he will ask her to leave. So, client is looking for another property. Client pays £230 p/w [per week] for 2 rooms in that house. One is for the children and the other is the living room that now is a room for client and her husband... With the consent of the client, I enclosed GYROS details for them to contact us if they need further information, as client does not speak English.

Here again we have a landlord ignoring their legal responsibilities and a tenant who fears homelessness should they address their (legal) rights with their landlord directly. The better (i.e safer, quicker) option is to find somewhere else to live. Clients tend to present to GYROS when in crisis, or when problems have become unmanageable. This urgency drives a pragmatic response to resolving issues- a new shift, a new job, a new landlord - without getting to the root cause of the legal problem, namely the poor employment practice of a local employer.

Our book provides many such examples taken from the GYROS dataset and our fieldwork. These case notes tell a different, and rather bleak, story of free movement to (small) towns and rural areas as compared to the stories of the metropolitan Eurostars. It is a story of vulnerability, exploitation, and powerlessness. Perhaps it is unsurprising that those with more physical, social and linguistic capital, and professional (transferable) qualifications, move through the single market and take full advantage of its opportunities, than those without.

However, the story of migrant workers in Great Yarmouth is a complex tale. It is also a story of hope and ambition (with many following an ‘any job’, and then a ‘better job’ trajectory). Precarity and debt is not the whole picture either. For the majority of those we spoke to the decision to come to England is (largely) still perceived as a good one for those who have decided to stay and get EU Settled Status (ie the right to stay and work after Brexit). Those who moved here twenty years ago (i.e after 2004 enlargement) have made a home in the UK. Free movement has not been circular or temporary but rather long term. Parents have children in the UK, some of those who came in the early 2000s now have grandchildren.

Our research thus offers another insight: that free movement is a process not an event. People put down roots in their new community. It is clear that nationals from these EU-8 Member States took advantage of their free movement rights and have benefited in some ways but faced more barriers than the Eurostars. There is a further issue: those who put down roots, whether Eurostars or the low paid, in the host country are ageing and will become increasingly reliant on that state for healthcare and benefits. This raises profound challenges for any receiving State, challenges which are currently largely being ignored.

In conclusion, while this Op-Ed offers a rather sobering reflection on the enlargement of the EU since 2004, the streets in Great Yarmouth also show the increased diversity and cultural, linguistic and other benefits and opportunities enlargement has brought to the town (the Portuguese cafes and restaurants are a good and visible example) over the past twenty years. The local residents have not always appreciated that, but there are signs that as the children of migrant workers and those of the locals attend school together more integration and understanding is occurring.

Catherine Barnard is a Professor of European Union Law and Employment Law at the University of Cambridge, and Senior Tutor and Fellow of Trinity College, Cambridge.

Fiona Costello is Researcher at the EU Migrant Worker Project, Faculty of Law, University of Cambridge, and Fellow and Tutor, St. Edmund’s College, Cambridge.

SYMPOSIUM

COMPETITION CORNER:

SYMPOSIUM ON SELECTIVITY IN STATE AID

Selectivity in the Tax Ruling Cases: Vulnerant Omnes, Ultima Necat

Dimitrios Kyriazis

“They all wound; the last one kills”. This Latin motto perfectly captures the effect certain key ECJ rulings have had on the EU Commission’s selectivity approach in the tax ruling cases of the past decade.

The purpose of this short opinion piece is to illustrate how, in my view, the Commission’s selectivity theory has been “treated” by the EU Courts. Spoiler alert: the answer is not one that would please DG COMP officials.

Firstly, we need to define tax ruling cases. These will be defined lato sensu for the purposes of this Symposium, thus including the Fiat case, the Engie case, and the Apple case (still pending before the ECJ), amongst others. The precedent that they have set, and the deference shown to Member States’ fiscal autonomy, will arguably continue to reverberate and expand in other fiscal State aid cases which do not directly concern tax rulings, such as the UK CFC case (see already the Opinion of AG Medina in this direction).

Secondly, and before we proceed any further, a disclaimer: I am actually rather opinionated about these cases, which is natural given that both my doctoral research at Oxford University and my subsequent OUP monograph focused on them. In fact, since 2016 I have been arguing, in various articles and blog posts, that the Commission’s overall approach in the tax ruling cases should be rejected by the ECJ because it is not legally sound and not safely grounded on the ECJ’s case law. Recent developments before the EU Courts therefore constitute a vindication of sorts, a fact which might be influencing my assessment.

Thirdly, we need to give to Caesar what belongs to Caesar. The Commission has managed to influence an important piece of the selectivity puzzle in its favour. I am referring to the (by now infamous) MOL “presumption”. In June 2015, in the MOL case, the ECJ established the following rule (para 60): in cases of individual aid ‘the identification of the economic advantage is, in principle, sufficient to support the presumption that it is selective’. This dictum has not been overturned by the ECJ and had actually massively assisted the Commission in (almost) all its final State aid decisions in the tax ruling cases, e.g. Starbucks/Apple/Fiat/Amazon, since it provided a selectivity “shortcut” which the Commission did not shy away from using as its (primary) selectivity reasoning. This presumption is therefore here to stay and will continue to aid the Commission whenever it seeks to substantiate the fulfilment of the selectivity condition in cases of individual aid. However, a remark is pertinent here: this presumption does not mean that a conflation of two distinct State aid conditions (advantage and selectivity) is permissible. The ECJ in its MOL judgment did not intend to pardon the conflation of the two most important State aid conditions. In fact, in para 59 of the same ruling, the ECJ had clearly stated that ‘the requirement as to selectivity under Article 107(1) TFEU must be clearly distinguished from the concomitant detection of an economic advantage, in that, where the Commission has identified an advantage, understood in a broad sense, as arising directly or indirectly

from a particular measure, it is also required to establish that that advantage specifically benefits one or more undertakings’.

Fourthly, and crucially, let us dig into our “main course” for the purposes of this Op-Ed: what have been the main “wounds” to the Commission’s selectivity approach? I will assert that we can single out one major issue, namely the deference shown towards national fiscal autonomy. This can be further broken down into two elements, with the first specifically concerning the identification of the reference framework (the first step of the three-step selectivity test) and the second concerning the emphasis placed on tax autonomy more generally. These are briefly examined in turn.

As regards the first issue, the ECJ in the Engie case of December 2023 ruled (para 177) that the reference system must include the provisions laying down the exemptions which the national tax authorities considered to be applicable, where those provisions do not, in themselves, confer a selective advantage for the purposes of Article 107(1) TFEU. The significance of this dictum cannot be overstated. The ECJ also went on to add that in ‘such a situation, in the light of the Member States’ own competence in the matter of direct taxation and the regard to be had for their fiscal autonomy [...] the Commission cannot establish a derogation from a reference framework merely by finding that a measure departs from a general objective of taxing all companies resident in the Member State concerned, without taking account of provisions of national law specifying the manner in which that objective is to be implemented’.

Based on this understanding of the selectivity test, which is extremely important as a matter of principle and can be applied more broadly to potentially any fiscal State aid case, the Court went on to actually find – in the Engie case – that the misidentification of the reference framework by the Commission had vitiated the whole of the selectivity analysis, which had been carried out on the basis of a reference framework encompassing the Luxembourg corporate income tax system.

This was obviously an ad hoc defeat for the Commission, but most importantly it was a heavy doctrinal loss, given that there can be no shortcuts in the first step of the selectivity exercise. It is not sufficient to point at a national tax provision which sets out an exception to the “rule” in this area of taxation and immediately and automatically classify it as a State aid derogation. The Commission needs to do better than that: exception and derogation are two different concepts and this had never been stressed with such vigour by the Court.

As regards the second issue, i.e., the deference shown towards national fiscal autonomy, our starting point will be the Fiat case of the ECJ’s Grand Chamber. More specifically, the Court there stated that (para 73), ‘outside the spheres in which EU tax law has been harmonised, it is the Member State concerned which determines, by exercising its own competence in the matter of direct taxation and with due regard for its fiscal autonomy, the characteristics constituting the tax, which define, in principle, the reference system or the ‘normal’ tax regime, from which it is necessary to analyse the condition relating to selectivity. This includes, in particular, the determination of the basis of assessment and the taxable event’. In other words, the normal tax regime (or reference system) needs to stem from national law, not from a hypothetical, notional and artificial amalgamation of soft law or from

creative interpretations of primary EU law, which is - in my opinion - what the Commission had endeavoured to do by inventing an independent EU law-derived arm’s length principle stemming directly from Article 107 TFEU.

In the same vein, the Court found (para 74) that it followed ‘that only the national law applicable in the Member State concerned must be taken into account in order to identify the reference system for direct taxation, that identification being itself an essential prerequisite for assessing not only the existence of an advantage, but also whether it is selective in nature.’ This was the nub of the case, together with the finding that the General Court, by accepting that the Commission may rely on rules which were not part of Luxembourgish law infringed the provisions of the TFEU. More specifically, the Commission infringed the provisions relating to the adoption by the European Union of measures for the approximation of Member State legislation relating to direct taxation, in particular Article 114(2) TFEU and Article 115 TFEU. The ECJ also highlighted that the autonomy of a Member State in the field of direct taxation, as recognised by settled case-law, cannot be fully ensured if, in the absence of any such approximation measure, the examination carried out under Article 107(1) TFEU is not based exclusively on the normal tax rules laid down by the legislature of the Member State concerned (para 94).

Coming back to the Engie case, the ECJ here reiterated some of the points made in its Fiat ruling, while further stressing the significance of national autonomy. For instance, in para 111, the Court noted that the determination of the reference framework (i.e. the first step of the selectivity test), which must be carried out following an exchange of arguments with the Member State concerned, must follow from an objective examination of the content, the structure and the specific effects of the applicable rules under the national law of that State. The ECJ also repeated that, outside the spheres in which EU tax law has been harmonised, it is the Member State concerned which determines, by exercising its own competence in the matter of direct taxation and with due regard for its fiscal autonomy, the characteristics constituting the tax, which define, in principle, the reference system or the ‘normal’ tax regime, from which it is necessary to analyse the condition relating to selectivity. This includes, in particular, the determination of the basis of assessment, the taxable event and any exemptions to which the tax is subject.

Finally, in para. 120 of its judgment, the Court held that ‘when determining the reference framework for the purpose of applying Article 107(1) TFEU to tax measures, the Commission is in principle required to accept the interpretation of the relevant provisions of national law given by the Member State concerned […], provided that that interpretation is compatible with the wording of those provisions’. The Court thus stressed that the Commission is in principle (i.e. as a default rule) obliged to accept the interpretation of national law which the Member State gives it, as long as the latter is compatible with the wording of those provisions.

This clarification is self-evident, i.e., the Member State should not engage in contra legem interpretation. What does this mean in practice? It means that, as a rule, the Commission cannot second guess Member States’ interpretation of its own laws. This should go without saying, but evidently it needed to be said, and it was thankfully said loud and clear by the Court. The rule is simple: Member States interpret their own laws, the EU

interprets its own laws. This is straightforward and reflects the rule of law principle, the principle of legality, as well as the principle of conferral and division of competences between the EU and its Member States.

Therefore, all of the above illustrate the growing emphasis placed by the Court on national tax sovereignty. In my view, this is surely in the right direction, and reflects the right balance between an exclusive EU competence (State aid) and the Member States’ fiscal autonomy.

This series of defeats has greatly “wounded” the EU Commission, but the final case will probably put the nail in the coffin. In the pending Apple case, despite the Opinion of Advocate General Pitruzzella, which was not compelling for the reasons I have described elsewhere, the ECJ is expected to follow the key tenets of its reasoning as set out in the Fiat and Engie cases and hand the Commission yet another defeat. More specifically, AG Pitruzzella arguably disregarded the due respect paid by the ECJ to national fiscal autonomy and insisted on using the arm’s length principle and its variations as a reference point for establishing the existence of a state aid advantage in favour of the Apple group. For instance, he failed to recognize that the “Authorized OECD- approach” (AOA) should not have been used in the first place to assess Apple’s tax arrangements in Ireland; only Irish tax law is relevant! Fiscal autonomy and national benchmarks reign supreme as regards both the advantage and selectivity conditions.

A similar development to Apple, i.e. another Commission defeat, is, in my view, to be expected in the pending UK CFC State aid case, where Advocate General Medina has advised the ECJ to quash the GC’s ruling and annul the Commission’s decision, with similar reasoning in relation to national fiscal autonomy (paras 58 et seq.). More specifically, the AG stressed that the combined effect of the Fiat and Engie rulings make it clear that the Commission’s analysis must rely on tax principles that are explicit in national law. It thus follows, in her (correct) view, that the reference framework must be established on the basis of national law as interpreted by the Member State, which is entitled to define the objectives and the constitutive elements of the tax legislation in question as well as the practical implementation of that legislation. Due to the Commission not accepting, inter alia, that the UK’s CFC rules were part of the UK general corporation tax regime, but instead arguing that they formed their own reference framework, the Commission had committed a legal error that vitiated its selectivity analysis.

To conclude, it has been shown that the Commission’s selectivity approach in cases which do not solely involve individual aid has come under fire by the ECJ, with the latter disagreeing with it in one key respect, namely the proper emphasis to be placed on national fiscal autonomy. After a series of setbacks and another key case still pending, the Latin motto chosen can be said to be apposite: vulnerant omnes, ultima necat.

Dimitrios Kyriazis (DPhil, Oxford) is an Assistant Professor of EU Law at the Law School of the Aristotle University of Thessaloniki.

SUGGESTED CITATION: Kyriazis, D.; “Selectivity in the tax ruling cases: vulnerant omnes, ultima necat”, EU Law Live, 11/06/2024, https://eulawlive. com/competition-corner/op-ed-selectivity-in-the-tax-ruling-cases-vulnerant-omnes-ultima-necat-by-dr-dimitrios-kyriazis/

The Dynamics of Selectivity in Tax Ruling Cases

Daniela Gschwindt

The dynamics of selectivity in tax ruling cases involves a complex interplay between national tax laws and EU State aid rules and highlights the ongoing tension between ensuring fair competition in the internal market and respecting the fiscal sovereignty of Member States. The reason why transfer pricing has increasingly come under the spotlight of the Commission is the widespread phenomenon of profit shifting, whereby groups have a certain degree of discretion in allocating expenses and income to their subsidiaries and permanent establishments in different locations. To date, the internationally accepted, non-binding standard for the allocation of taxable income between associated undertakings is the arm’s length principle (ALP), as set out in the OECD Model Tax Convention. Uncontrolled transactions must be subject to the full play of market forces in order to be considered arm’s length. In other words, transfer prices must not be manipulated to artificially shift profits abroad, but must ensure equal treatment of related and unrelated transactions.

Tax rulings in national law are a generally straightforward and unproblematic procedure whereby taxpayers can obtain formal confirmation of the tax consequences from the national tax authorities before transactions are finalised, setting out the transfer pricing method applied. In this way, they provide taxpayers with legal certainty when determining the ALP and the value of transactions. Tax rulings do not constitute aid if they are merely interpretations and applications of tax rules based on objective criteria. However, if the authority exercises discretionary powers that go beyond the simple administration of tax revenues, a measure may be selective. The main problem is therefore the method chosen to calculate transfer prices between affiliated undertakings. What has caused a lot of outrage recently is that the Commission has based its decisions on some tax rulings on its own methodology instead of relying on the respective national approach and assumes that Art. 107 TFEU contains an independent European ALP.

Revolutionising selectivity? The Commission’s new approach

The most prominent tax rulings investigated by the Commission concern Amazon’s profit shifting between its subsidiaries (C-457/21 P), Apple’s shifting of income between its Irish subsidiaries ( T-778/16 and T-892/16), Fiat’s granting of an intra-group loan to its subsidiaries (C-885/19 P and C-898/19 P), Engie’s intra-group financial transactions (C-451/21 P and C-454/21 P) and Starbucks’ application of intra-group transfer pricing ( T-760/15 and T-636/16). Although the cases were analysed for differing factual reasons, they all revolve around the criterion of selectivity, in particular vis-à-vis the definition of the reference system. In these tax ruling cases, the Commission has defined the general corporate tax system as the reference system. As a result, the Commission’s definition of the reference system includes both integrated (group companies) and non-integrated companies (stand-alone companies). The Commission is of the opinion that intra-group transactions of integrated companies

should be priced at arm’s length in order to ensure equal treatment between them and non-integrated companies on the basis of Art. 107(1) TFEU. The Commission derives the ALP directly from primary law (Commission Notice, para. 172) and bases this on the judgement of the European Court of Justice in Forum 187 (C-182/03 and C-217/03, paras. 95-97), according to which the Member States should apply their national ALP for the correct choice of transfer pricing method and the correct approximation of prices that would have been calculated under conditions of free competition.

When assessing the selectivity of a measure, the Commission resorts to the three-step test, which comprises the determination of a reference system (i) from which a derogation must be established by comparing the tax treatment under the ‘normal’ system with that under the deviating measure (ii) and a justification analysis (iii). When assessing comparability within the three-step test, the Commission does not take into account the economic and structural differences between groups and individual companies, i.e. two undertakings in different factual situations are considered comparable. It would make more sense to compare an integrated undertaking that benefits from a ruling with an undertaking that does not benefit from a ruling but from the normal transfer pricing rules under national law. Furthermore, the Commission is simply creating its own reference system, based neither on national law nor on existing EU law, but on its subjective interpretation and the derivation of a hypothetical standard from it. The national legal framework is simply ignored. In this context, it also chooses a very incoherent methodological approach by basing its arguments on the OECD guidelines, while at the same time clearly emancipating its own ALP from that of the OECD.

Refining the framework: the Court’s clarification

The Court’s approach to selectivity in tax ruling cases has been shaped by several significant rulings. In Starbucks, the General Court determined that the European Commission had not sufficiently demonstrated the existence of a selective advantage, indicating that merely identifying a methodological error was insufficient to prove State aid ( T-760/15 and T-636/16, paras. 200-205, 427). Similarly, in Apple, the General Court concluded that the Commission failed to establish that a selective advantage existed (T-778/16 and T-892/16, paras. 312 et seq.). Advocate General Pitruzzella supported the Commission, suggesting that important arguments were overlooked and emphasizing the application of the ALP according to the OECD approach. However, this stance seems odd given that the European Court of Justice in cases such as Engie and Fiat clearly stresses the importance of national law in determining the reference system.

In November 2022, the European Court of Justice delivered a pivotal Grand Chamber judgment in the Fiat case, where it annulled the Commission’s decision ordering Fiat to repay €30 million in taxes to Luxembourg. The General Court supported the Commission’s approach, which treated integrated and stand-alone companies equally, referencing the Forum 187 judgment and using the EU ALP as a benchmark (T-755/15, paras. 134-187, 211-285). The General Court’s ruling validated the autonomous nature of the State aid concept and the ALP, and thereby the wide discretion of the Commission. However, the European Court of Justice, concurring with Advocate General Pikamäe, overturned this ruling, clarifying that the reference system must be based on national law rather

than an idealised version of the ALP. The European Court of Justice rejected the Commission’s interpretation of Forum 187, asserting that the Commission and the General Court had improperly interfered with the tax sovereignty of Member States by relying on a hypothetical ALP not grounded in national legislation (C-885/19 P and C-898/19 P, paras. 72-74, 102-104, 122). This decision underscored the necessity for the Commission to demonstrate systematic discrimination against transactions between stand-alone companies compared to those between integrated companies, setting a high evidentiary standard but leaving room for future investigations into fiscal State aid. Unfortunately, the Court did not address whether a broad or narrow definition of the reference system should have been chosen and whether Luxembourg had applied the national legislation correctly. In Amazon, the European Court of Justice reiterated its stance from the Fiat case and emphasised once more that there is no autonomous ALP operating independently of its integration into national law but missed to clarify the aforementioned point (C-457/21 P, paras. 41-59).

In Engie, the European Court of Justice clarified that classifying a measure as selective requires understanding the content of relevant national provisions and examining national administrative and judicial practices. In cases where the Commission was unable to show deviation from national practice in comparable transactions, it failed to demonstrate that national provisions were infringed. Justifying a derogation by merely stating that a measure deviates from the general objective of taxing all companies is insufficient without reference to the specific provisions detailing how that objective is to be achieved (C-451/21 P and C-454/21 P, paras. 104-132, 151-160, 168-186).

Advocate General Kokott’s opinion in the Engie case further highlighted the importance of examining only tax measures and decisions designed in a manifestly discriminatory manner under State aid law. She proposed that only those (manifest) derogations that cannot be plausibly explained to a third party should be scrutinized, rather than incorrect applications or rulings, to avoid overburdening the Commission and the European Courts with the task of correctly interpreting national tax rules (paras. 86-101, 152-154, 163 et seq.).

In summary, the Court’s approach emphasizes the necessity of grounding assessments in national law, setting high standards for proving discrimination and ensuring that derogations are plausibly explained to avoid undue burdens on the judicial system. This approach maintains respect for Member States’ tax sovereignty while allowing for scrutiny of potentially discriminatory practices.

Conflation of selectivity and advantage in the State aid analysis

In assessing the infringement of Art. 107 TFEU in the tax rulings mentioned, the Court and especially the Commission confused the criteria of selectivity and advantage. Instead of following the traditional three-step assessment approach, the Court first established the reference system, then determined whether there was an advantage and only then proceeded to steps two (derogation) and three (justification). Although the European Court of Justice recognised advantage and selectivity as two separate criteria with distinct aims, it considered that these criteria could be examined together as a third condition (selective advantage) (C-15/14 P, paras. 59-60).

Although the European Court of Justice has stated that the fulfilment of the condition of advantage in principle, i.e. not always, creates a rebuttable presumption that the condition of selectivity is fulfilled, the Commission

seems to overlook the decoupling of the two conditions when it considers that a selective advantage exists when a tax ruling confirms a result that does not reflect what would result from the normal application of the ordinary tax system (to an independent company) (Commission Notice, para. 170). The application of the ‘normal’ system is thus equated with the approximation of a market economy result. Such an approach is problematic as the methodology for determining selectivity is not coherent in itself and now adds another layer of complexity by conflating these criteria.

This conflation undermines the clarity of the selectivity analysis, as the criteria of selectivity and advantage are aimed at different aspects of State aid. Selectivity focuses on whether a measure favours certain undertakings over others in similar circumstances, while advantage examines whether the measure offers an economic benefit that would not otherwise exist. Combining these assessments not only blurs these different concepts, but also risks inconsistent application of the law. Thus, while the Court’s intention to streamline the assessment process may be aimed at efficiency, the blurring of selectivity and advantage in the analysis poses significant methodological challenges to the application of the classic three-step test. There is a risk that important contextual and justifying factors, such as the specificities of national tax systems and the rationale behind certain tax rulings, are ignored. Different cases can and are already subject to varying interpretations and standards, undermining the uniform application of EU law and leading to legal uncertainty for Member States and businesses. Moreover, in such a scenario, the burden of proof is no longer on the Commission, but on the parties, who must prove that an advantage is not selective. This current simplistic approach denies Member States and affected parties a complete assessment of all elements of Art. 107 TFEU.

Concluding thoughts

Despite the concerns of Member States that the Commission is engaging in disguised tax harmonisation, the Court has clarified that tax measures, including tax rulings, can indeed fall within the scope of State aid law and thus are subject to examination under Art. 107 TFEU. This seems to be a natural consequence of the efforts to preserve the competitiveness of the internal market.

In its assessment of tax rulings, the Commission goes beyond merely verifying the correctness of the method applied, but performs an independent assessment of the objectivity of the tax calculation. The Commission asserts that group companies and stand-alone companies should be treated equally, eliminating a proper assessment of the first and second step of the three-step test. These are replaced by the addition of the advantage requirement. A recent novelty in the Commission’s approach has been the reference to the ALP, arguing that it derives from Art. 107 TFEU. This assumption of an autonomous European ALP led to a wave of cases before the European Courts.

The European Court of Justice clarified that only national law should be used to determine the reference system. The Commission must demonstrate systematic discrimination against (stand-alone) companies carrying out comparable transactions (see Fiat, Amazon and Engie). Both Advocates General and the Court have cautioned against the dangers inherent in determining the reference system, warning that it risks transforming the Commission and the Court into a de facto supreme tax authority and court. A critical question that was not

resolved is whether a wide margin of discretion granted by national legislators to tax administrations in applying the ALP automatically constitutes State aid. Even without such wide discretion, it was not specified which characteristics a tax ruling must possess to be considered State aid. Determining taxable profit is not an exact science, as transfer pricing methods provide only approximations. The Commission and Courts should therefore limit themselves to consistency and plausibility checks, bearing the burden of proof for all elements of Art. 107(1) TFEU.

As an immediate consequence of these judgements, the Commission must revise its Commission Notice, which explicitly refers to the existence of an autonomous ALP under Art. 107(1) TFEU. Given the increasing international interdependence of businesses, the need for binding statements and legal certainty for multinational companies is also growing. Hence, clear State aid guidelines are necessary to inform companies and tax authorities about the permissible room for maneuver. It appears that the Commission’s practice is driven more by considerations of tax fairness than by the applicable norms of international tax law and attempts to remedy this shortcoming through state aid law.

For these reasons, consideration should be given to reorganising the three-step test for tax aid in general and even introducing a new test. The creation of a reference system, which harbours the above-mentioned risks, could be replaced by a simple comparability analysis, as is the case for the assessment of tax measures under the fundamental freedoms. This would eliminate the need for benchmarking, both for selectivity and for advantage, and the test would be limited to a rule of reason-like assessment to determine the (non-)existence of equal treatment.

SUGGESTED CITATION: Gschwindt, D.; “The dynamics of selectivity in tax ruling cases”, EU Law Live, 11/06/2024, https://eulawlive.com/ competition-corner/the-dynamics-of-selectivity-in-tax-ruling-cases/

Daniela Gschwindt is a doctoral candidate in EU state aid law at the University of Vienna.

THE LONG READ

The EU’s New Directive on Combating Gender-Based Violence (GBV)

Mathias Möschel 1

On 24 April 2024, the European Parliament (EP) approved the Directive on combating violence against women and domestic violence (the GBV Directive) by 522 votes in favour, 27 against, and 72 abstentions. Followed by a decision by the Council of the European Union (CoEU) on 7 May, it was published in the Official Journal of the European Union on 24 May 2024.2 Member States will need to implement it by 14 June 2027.3 The legal basis for its adoption were Articles 82(2) of the Treaty on the Functioning of the European Union (TFEU) on judicial cooperation in criminal matters and 83(1) TFEU on the definition of serious transnational crimes, also known as the ‘Eurocrimes’, amongst which also figure the ‘trafficking in human beings and sexual exploitation of women and children’ and ‘computer crimes’. Structured in seven chapters, Chapters 1 and 7 respectively establish certain definitions and final provisions. Chapter 2 establishes the specific offences which Member States need to punish: female genital mutilation (Art. 3), forced marriage (Art. 4), non-consensual sharing of intimate or manipulated material (Art. 5), cyber stalking (Art.6), cyber harassment (Art.7), cyber incitement to violence or hatred (Art. 8). Chapters 3 and 4 further strengthen the protection of victims and victim support whereas Chapters 5 and 6 lay down rules on prevention and coordination and cooperation.

This instrument had a complicated, but ultimately surprisingly quick, adoption time. First official traces of this GBV Directive can be found in the EC’s Gender Equality Strategy 2020-2025, in which the EC’s President, Ursula von der Leyen, indicated that ‘[t]he EU will do all it can to prevent and combat gender-based violence, support and protect victims of such crimes, and hold perpetrators accountable’.4 At that time, the GBV Directive was presented as an alternative to the EU’s ratification of the Convention on Preventing and Combating Violence Against Women and Domestic Violence (Istanbul Convention), if that ratification failed to take place.5

On 8 March 2022, the European Commission published an official proposal for a GBV Directive, which already used the final provisions as a legal basis.6 At this stage, the EC presented this proposal as constituting part of its implementation of the Istanbul Convention in the areas of its already existing competences and even going

1. Associate Professor at Central European University (CEU), Department of Legal Studies, Vienna, Austria (moschelm@ceu.edu).

2. Directive (EU) 2024/1385 of the European Parliament and of the Council of 24 May 2024 on combating violence against women and domestic violence, PE/33/2024/REV/1.

3. Ibid., at art. 49.

4. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions a Union of Equality: Gender Equality Strategy 2020-2025, COM/2020/152 final, at 3.

5. Ibid.

6. Proposal for a Directive of the European Parliament and of the Council 2022/0066(COD) of 8 March 2022 on combating violence against women and domestic violence, (COM)2022 105 final.

beyond that instrument especially with regard to cyber-crimes.7 Given that since then the EU has ratified the Istanbul Convention,8 the GBV Directive became a self-standing instrument.

Two years of intensive discussions, debates and compromises between opposing actors and positions ensued. On the one hand –favouring a broad approach to this instrument– were the European Commission, the European Parliament as well as many European women’s NGOs and some Member States. On the other hand –favouring a narrower approach– were the CoEU and other Member States. The reasons and positions on both ends did not always have the same basis or underpinning logic.

The choice and discussions surrounding the adequacy of the legal basis already point to some of those differences. In fact, one might have expected that Article 19 TFEU which allows the EU to legislate in the domain of non-discrimination, would have been the theoretically most appropriate legal basis for an instrument which in numerous of its recitals (e.g. 2, 3, 4, 6) refers to the idea that such violence constitutes discrimination. However, this legal basis would have required unanimity and in practice it was known that such unanimity was very difficult to achieve, given some Member States’ resistance. Hence, the second-best theoretical and practical choice was using the two above-mentioned provisions which require only a majority vote under the ordinary legislative procedure.

But even with such a legal basis, it was not all smooth sailing. The main bone of contention of the whole debate eventually became whether to include rape in the list of crimes, as had been the case in the EC’s initial proposal under Article 5. In EU Member States, there exist differences in defining rape where some already adopt modern consent-based definitions whereas others still have old-fashioned force-based definitions. The GBV Directive’s goal would have been to harmonize this, thus ensuring that all women throughout the EU can be protected in similar ways from rape.

However, at the end of 2022, the Legal Service (LS) of the CoEU issued a legal opinion on the draft proposal for the GBV Directive.9 The main skepticism in that document concerned the possibility of including rape and

7. Ibid., p.7.

8. The process was a tortuous one. The EU signed the Istanbul Convention via two separate Council decisions (Council Decision (EU) 2017/865 of 11 May 2017 on the signing, on behalf of the European Union, of the Council of Europe Convention on preventing and combating violence against women and domestic violence with regard to matters related to judicial cooperation in criminal matters, OJ 2017 L 131/11, pp. 11-12; and Council Decision (EU) 2017/866 of 11 May 2017 on the signing, on behalf of the European Union, of the Council of Europe Convention on preventing and combating violence against women and domestic violence with regard to asylum and non-refoulement, OJ 2017 L 131/11, pp. 13–14), followed by a legal opinion by the CJEU (CJEU, Opinion of 6 October 2021 (1/19 [GC]). Finally, it adopted two decisions on the accession on 1 June 2023: Decision no. 2023/1076 (Council Decision (EU) 2023/1076 of 1 June 2023 on the conclusion, on behalf of the European Union, of the Council of Europe Convention on preventing and combating violence against women and domestic violence with regard to matters related to judicial cooperation in criminal matters, asylum and non-refoulement, LI 143/4) with regard to matters related to judicial cooperation in criminal matters, asylum and non-refoulement and Decision no. 2023/1075 (Council Decision (EU) 2023/1075 of 1 June 2023 on the conclusion, on behalf of the European Union, of the Council of Europe Convention on preventing and combating violence against women and domestic violence with regard to institutions and public administration of the Union, LI 143/1) with regard to institutions and public administration of the Union, published in the official journal on the following day. They both entered into force on 22 June 2023, and the Istanbul Convention became binding on the EU as of 1 October 2023.

9. Opinion of the Legal Service of the Council of the European Union of 31 October 2022, no. 14277/22.

female genital mutilation as Eurocrimes under Art. 83(1) TFEU. This can only be achieved via a separate reading of sexual exploitation of women and children from trafficking in human beings. Admittedly, there had been a precedent of using Art. 83(1) TFEU for certain crimes under the Child Sexual Abuse and Sexual Exploitation Directive.10 Moreover, in the drafting history of this provision the word ‘and’ had substituted the words ‘in particular’ between the expressions ‘trafficking in human beings’ and ‘sexual exploitation of women and children’, allowing the EC to argue that these could be read as separate elements. The LS, instead, opined that including rape limitedly to women and not also men in the proposal could raise issues of non-discrimination in as far as the autonomous reading of sexual exploitation of women and children would not extend to men. A similar objection would not apply to female genital mutilations for obvious reasons. Hence, the LS recommended not to include rape in the proposed directive due to the legal risks involved, unless a gender-neutral formulation would be adopted.

Apart from the CoEU, some Member States like Germany, France, Hungary and Poland prior to its recent political change also had doubts about including rape in this new instrument, albeit for different reasons. Despite having already a consent-based definition of rape, Germany probably feared an EU competence creep with possible ultra vires claims before its constitutional court, also because the cross-border element in rape cases might be seen as lacking or very limited.11 France, instead, still has a force-based definition of rape and possibly was more concerned about something that would be seen as imposed externally, rather than initiated as an internal process. For Hungary (and initially Poland, too), the resistance is mostly due to a more profound objection against using gender and progressive Western instruments in the domain, like the related Istanbul Convention.

These and probably other Member State delegations’ reactions led to some changes to the draft text of the GBV Directive already in mid-2023. In fact, without Germany and France no majority could be reached to pass the GBV Directive.12 Most importantly, already then rape had been omitted –along with some of the procedural issues raised by the Bundesrat– and the transposition time had been raised from two to three years.

At this point, the floor was opened for the final interinstitutional negotiations (trilogue) between the EC, EP and the CoEU. Those ended with a political agreement on 6 February 2024,13 which was then tabled for the final vote in April 2024. On the downside, in the final version rape remained excluded. However, on the upside –and possibly to compensate for that loss– the EP and other actors managed to insert a whole set of other and new elements

10. Directive 2011/93/EU of the European Parliament and of the Council of 13 December 2011 on combating the sexual abuse and sexual exploitation of children and child pornography, and replacing Council Framework Decision 2004/68/JHA, OJ 2011 L 335, p. 1–14.

11. For a critical analysis of this position, see: Dilken Çelebi, Lisa Marie Koop and Leokadia Melchior, ‘Germany Blocks Europe-Wide Protection of Women Against Violence’, Verfassungsblog, 17 January 2024. Interestingly, an earlier input by the Upper Chamber of the German Parliament had only critiqued some procedural issues relating to penalties, aggravating circumstances, limitation periods and protection of victim’s life and how they could constitute an unnecessary intervention into the coherence of the national criminal law system as well as potential violations of the constitutional and supranational right to fair trial but there was no mention about the question of rape at that point. Beschluss des Bundesrats of 8 July 2022 on Vorschlag für eine Richtlinie des Europäischen Parlaments und des Rates zur Bekämpfung von Gewalt gegen Frauen und häuslicher Gewalt, Drucksache 131/22 (Beschluss).

12. Council of the European Union, Interinstitutional File: 2022/0066(COD), 17 May 2023.

13. See European Parliament, Legislative Train 03.2024 6 A new Push for European Democracy, Legislative Train, 20 March 2024.

into this instrument. A new offence of forced marriage was added (Art. 4); the list of aggravating circumstances was expanded to include when certain offences are committed against public representatives, journalists, human rights defenders (Art. 11 (n)) and for honour crimes (Art. 11 (o)); intersectional discrimination, was explicitly mentioned in a series of recitals (e.g. 6, 71) and provisions (e.g. Art. 33), explicitly including certain groups such as lesbian, bisexual or disabled women (Recitals 71 and 74); specific rape prevention measures were inserted (Art. 35) as well as the encouragement for rape offenders to take part in intervention programmes (Art. 37, para. 3); and a general extension of certain victim’s rights for all victims of crimes that are defined as amounting to violence against women under national or EU law, including cyberflashing, forced sterilization, sexual harassment at workplace (see e.g. Recital 9 and Art. 28). Last but not least, the report and review period was increased from seven to eight years from the entry into force of the GBV Directive, but it included the explicit mention that the EC can then determine if new offences need to be inserted and if sexual harassment and violence in the workplace need to be further addressed (Art. 45). Thus, the door was kept open to bringing rape (or other crimes related to gender-based violence) back into the picture as Eurocrime offence, if little or no progress is made.

In conclusion, despite the disappointment concerning the exclusion of rape, the adoption of the GBV Directive must be celebrated as a success for the EC, given the tortuous path to its adoption. Since its launch five years ago at the start of the COVID pandemic, the EP, some Member States, and civil society actors worked tirelessly for a broad approach to this issue, in an overall political climate of populism, attacks on gender, and democratic/ constitutional backsliding. Moreover, its adoption during the last EP’s session prior to its renewal in June, when its political composition may change profoundly, also had a certain urgency to it. If not passed now, who knows if this instrument might have seen the light of the day, at least in its current form?

SUGGESTED CITATION: Mathias Möschel; “The EU’s New Directive on Combating Gender-Based Violence (GBV)”, https://eulawlive.com/ weekend-edition/weekend-edition-no191/

HIGHLIGHT F THE WEEK S O

Cortex Havacilik ve Turizm Ticaret AŞ challenges Commission’s flight ban: official publication in OJ

Monday 10 June

On 19 April 2024, Cortex Havacilik ve Turizm Ticaret AŞ, a Turkish company based in Kepez, initiated legal proceedings against the European Commission, challenging the imposition of a flight ban on their aircraft: Ticaret v Commission (Case T-213/24).

Read on EU Law Live

Request for preliminary ruling on taxation of undeclared foreign assets, published in OJ

Monday 10 June

On 23 February 2024, the Tribunal Judiciaire de Nanterre (France) lodged a request for a preliminary ruling with the European Court of Justice in the case TJ v Direction régionale des finances publiques d’Ile de France et de Paris (Case C-141/24), involving the taxation of assets held abroad that were not declared according to French tax procedures.

Read on EU Law Live

Summary of Commission Decision declaring unlawful the acquisition of eTraveli by Booking, Opinion of Advisory Committee, and Final Report of Hearing Officer, published in OJ

Monday 10 June

The Official Journal of the EU published the Summary of Commission Decision declaring a merger between Booking Holdings and eTraveli Group as incompatible with the internal market and the functioning of the EEA Agreement.

Read on EU Law Live

Preliminary ruling request concerning revocation of trade marks across member states, published in OJ

Monday 10 June

The Cour de cassation (France) lodged a request for a preliminary ruling with the European Court of Justice on 28 February 2024, concerning the case PMJC SAS v [W] [X], [M] [X], [X] Créative SAS (Case C-168/24, PMJC), which involves the interpretation of Article 12(2)(b) of Directive 2008/95/EC and Article 20(b) of Directive (EU) 2015/2436, both relating to the laws on trade marks across Member States.

Read on EU Law Live

Preliminary rulings on classification of services and payment practices for public prosecutor’s offices, published in OJ

Monday 10 June

The Italian Supreme Court (Corte Suprema di Cassazione) requested preliminary rulings from the Court of Justice in three cases concerning the classification of services performed by private companies for public prosecutors’ offices and the applicable payment and interest regulations under EU law.

Read on EU Law Live

General Court to hear case against the decision of the European Parliament to waive Eva Kaili’s immunity

Monday 10 June

Official publication was made of an action for annulment brought on 19 April 2024 by Eva Kaili, Member of the European Parliament, against the European Parliament: Kaili v Parliament (T-212/24).

Read on EU Law Live

EU and Bangladesh sign Horizontal Aviation Agreement to promote enhanced competition and connectivity

Monday 10 June

On the 7th of June, the EU and Bangladesh signed a Horizontal Aviation Agreement, which will allow any EU airline to operate flights between Bangladesh and any of the seven EU Member States (Belgium, Denmark, Italy, Netherlands, Poland, France and Slovakia) whose bilateral air services agreements with Bangladesh does not already allow this.

Read on EU Law Live

Court of Justice to hear case concerning preliminary reference in criminal proceedings relating to human trafficking

Monday 10 June

Official publication was made of a request for a preliminary ruling from the Okrazhen sad Pleven (Bulgaria), lodged on 3 April 2024, in criminal proceedings against M.N.D. and Y.G.Ts: Tsenochev (C-241/24).

Read on EU Law Live

Commission opens an in-depth investigation to assess, under the Foreign Subsidies Regulation, the acquisition by the Emirates Telecommunications Group Company PJSC of sole control of PPF Telecom Group B.V.

Tuesday 11 June

The European Commission launched an in-depth investigation under the Foreign Subsidies Regulation (FSR) to examine Emirates Telecommunications Group Company PJSC (e&) acquiring sole control of PPF Telecom Group B.V. (PPF), excluding its Czech business.

Read on EU Law Live

Resource shortages undermine GDPR Enforcement, EU Agency for Fundamental Rights report finds

Tuesday 11 June

The new report from the EU Agency for Fundamental Rights (FRA) highlighted significant challenges faced by data protection authorities (DPAs) in implementing the General Data Protection Regulation (GDPR).

Read on EU Law Live

Gender equality as grounds for refugee status: Court of Justice rules

Tuesday 11 June

The Court of Justice delivered its judgment in Staatssecretaris van Justitie en Veiligheid (Women identifying with the value of gender equality) (Case C-646/21) concerning the case of two Iraqi teenagers seeking international protection in the Netherlands.

Read on EU Law Live

Court of Justice dismisses Commission’s appeal in case concerning payment of default interest relating to reimbursement of a fine imposed for violation of competition rules

Tuesday 11 June

The Court of Justice, sitting in its Grand Chamber, delivered its judgment in a case regarding an appeal, brought on 28 March 2022, by the European Commission against the judgment of the General Court in Case T-610/19, which, in essence, concerns the Commission’s obligation to pay default interest on a fine under competition law in case of its reimbursement: Commission v Deutsche Telekom (C-221/22 P).

Read on EU Law Live

Court of Justice streaming hearing of case on compatibility of Slovenian Law on environmental protection with provisions of the TFEU, Charter, ECHR and secondary EU law

Tuesday 11 June

The Court of Justice’s Grand Chamber hearing in INTERZERO and Others (C-254/23), a case regarding the interpretation of EU law in the context of national proceedings concerning two petitions for the initiation of proceedings for the review of the constitutionality of Law on environmental protection to the extent that it governs the extended producer responsibility system and determines the transition period for the implementation of the new extended producer responsibility system, was streamed on the Court’s website.

Read on EU Law Live

Commission sends letter Letter of Formal Notice to Czechia for possible breach of competition rules in industry of collection, recovery and packaging of waste

Tuesday 11 June

The European Commission informed Czechia, via a Letter of Formal Notice, that measures appointing EKO-KOM as the only company authorised for the collection and recovery of packaging waste for over two decades may be in breach of the EU competition rules.

Read on EU Law Live

EU Justice Scoreboard, published by the Commission

Tuesday 11 June

The 2024 edition of the EU Justice Scoreboard, published by the European Commission, highlights an improvement in the public’s perception of judicial independence across EU Member States, including those facing systemic challenges.

Read on EU Law Live

European Commission: Hungarian support for construction of new plant for automotive parts is not in line with EU State aid rules

Tuesday 11 June

The European Commission concluded that Hungary’s plan to support the construction of a new automotive components plant in Észak Magyarország is not in line with EU State aid rules.

Read on EU Law Live

Preliminary ruling request concerning the Directive 2001/83/EC related to marketing authorisations of medicinal products, published in OJ

Wednesday 12 June

The Conseil d’État (France) referred a preliminary ruling to the Court of Justice concerning the interpretation of specific provisions of Directive 2001/83/EC related to marketing authorisations of medicinal products.

Read on EU Law Live

ESA issues decision approving Norway’s tax exemption scheme to support reduction of nitrogen oxide emissions

Wednesday 12 June

The EFTA Surveillance Authority (ESA) approved a prolongation of a tax exemption on emissions of nitrogen oxides (NOx), to reduce such emissions in line with Norway’s environmental targets.

Read on EU Law Live

Commission Implementing Regulation (EU) 2024/1662 concerning temporary increase of official controls and emergency measures on entry of certain goods from third countries, published in OJ

Wednesday 12 June

The European Commission adopted Implementing Regulation (EU) 2024/1662, amending Implementing Regulation (EU) 2019/1793, which concerns the temporary increase of official controls and emergency measures for the entry of certain goods into the EU from specific third countries.

Read on EU Law Live

General Court rejects VEB.RF’s action for annulment against restrictive measures concerning actions undermining or threatening the territorial integrity, sovereignty, and independence of Ukraine

Wednesday 12 June

The General Court delivered its judgment in case VEB.RF v Council (case T-288/22) in which State Development Corporation “VEB.RF”, based in Moscow, Russia, filed an action based on Article 263 TFEU seeking, primarily, the annulment of Decision (CFSP) 2022/265 of February 23, 2022, and its associated regulations, which impose restrictive measures concerning actions undermining or threatening the territorial integrity, sovereignty, and independence of Ukraine.

Read on EU Law Live

General Court dismisses action against registration of the EU trade mark ‘TOUR DE X’

Wednesday 12 June

The General Court has rendered its judgment in a case concerning an action brought by the applicant, Société du Tour de France, seeks annulment of the decision of the Second Board of Appeal of the European Union Intellectual Property Office (EUIPO) of 11 July 2022 (Case R 1136/2019-2) (‘the contested decision’): Société du Tour de France v EUIPO - FitX (TOUR DE X) (T-604/22).

Read on EU Law Live

Common Implementation Plan for the Pact on Migration and Asylum, released by Commission

Wednesday 12 June

The European Commission unveiled the Common Implementation Plan for the Pact on Migration and Asylum, outlining the key steps necessary to transform a series of complex legislative measures into actionable policies over the next two years.

Read on EU Law Live

Council adopts negotiating mandate concerning the Retail Investment Package

Wednesday 12 June

The Council reached an agreement on a legislative package aimed at supporting individual consumers who wish to invest on the EU’s capital markets, by better protecting their investments, providing them with clearer information about investment products and ensuring more transparency and disclosure.

Read on EU Law Live

European Commission: Subsidisation of Chinese battery electric vehicles value chain is causing economic injury to Union producers

Wednesday 12 June

The Commission provisionally concluded that the battery electric vehicles (BEV) value chain in China benefits from unfair subsidisation, which is causing a threat of economic injury to the EU BEV producers.

Read on EU Law Live

Council Decision (EU) 2024/1677 on the approval of the withdrawal of the Euratom from the Energy Charter Treaty, published in OJ

Thursday 13 June

Council Decision (EU) 2024/1677, adopted on 30 May 2024, approved the withdrawal of the European Atomic Energy Community (Euratom) from the Energy Charter Treaty (ECT).

Read on EU Law Live

Commission v. Hungary: Failure to comply with earlier judgment on reception of applicants for international protection constitutes ‘unprecedented and exceptionally serious breach of EU law’

Thursday 13 June

The Court of Justice handed down judgment in Commission v. Hungary (Reception of applicants for international protection II) (C-123/22), following its earlier ruling in Commission v. Hungary (Reception of applicants for international protection I) (C-808/18), in which it held that Hungary had failed to comply with EU rules on procedures for the granting of international protection and the return of illegally staying third-country nationals.

Read on EU Law Live

Court of Justice clarifies VAT fixed establishment rules for cross-border services

Thursday 13 June

The Court (Tenth Chamber) of Justice has delivered its judgment in case c-533/22 regarding the interpretation of certain articles of the Council Directive 2006/112/EC on the common system of value-added tax (VAT), as amended by Council Directive 2018/1695, and the Council Implementing Regulation No 282/2011.

Read on EU Law Live

Court of Justice rules on refugee status for stateless Palestinians under UNRWA

Thursday 13 June

The Court of Justice delivered its judgment in Case C-563/22 | Zamestnik-predsedatel na Darzhavna agentsia za bezhantsite (Refugee status – Stateless person of Palestinian origin) concerning the Procedures Directive and the Qualifications Directive. According to the latter, persons registered with United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) are, in principle, excluded from refugee status in the European Union.

Read on EU Law Live

Commission decision transferring monitoring and enforcement activities to UK Competition and Markets Authority in relation to merger in the aviation sector, published in OJ

Thursday 13 June

The Official Journal of the EU published Commission Decision (EU) 2024/1665 of 12 June 2024 transferring the monitoring and enforcement of commitments made binding in Case M.6447 – IAG / bmi to the designated national competition authority of the UK pursuant to Article 95(2) of the EU-UK Withdrawal Agreement.

Read on EU Law Live

Commission Communication concerning approval of draft Commission Regulation on de minimis aid rules in the agricultural sector, published in OJ

Thursday 13 June

Official publication was made of a Communication from the Commission regarding the approval of the content of a draft Commission Regulation amending Commission Regulation (EU) 1408/2013 on the application of Articles 107 and 108 TFEU to de minimis aid in the agriculture sector.

Read on EU Law Live

Court of Justice: Procedure awarding public contract divided into lots is not precluded by principles of transparency and equal treatment in the Public Procurement Directive

Thursday 13 June

The Fourth Chamber of the Court of Justice has rendered its judgment in a case concerning a preliminary ruling request from the Court of Appeal for the Eastern Region, Denmark, seeking to clarify, in the context of a procedure for the award of a public contract divided into lots, the scope of the principles of transparency and equal treatment, and of the resulting prohibition on negotiation: BibMedia (C-737/22).

Read on EU Law Live

Court of Justice: Commission has no jurisdiction to assess compatibility of measure with State aid rules, without first classifying the measure as State aid

Thursday 13 June

The Second Chamber of the Court of Justice has delivered its judgment in a case on appeal brought by the European Commission against the judgment of the General Court in Case T-469/20, the latter concerning the applicant’s claim that the Court should annul Decision C(2020) final 2998 of the European Commission of 12 May 2020 on State aid SA.54537 (2020/NN) – Prohibition of coal for the production of electricity in the Netherlands: Commission v Pays-Bas (Appréciation de compatibilité d’une mesure non qualifiée d’aide d’État) (C-40/23 P).

Read on EU Law Live

AG Pikamäe interprets scope of requirement, under Article 38 of Directive 2013/32, that applicant for international protection must be readmitted to third country

Thursday 13 June

Advocate General Pikamäe delivered his Opinion in Somateio ‘Elliniko Symvoulio gia tous Prosfyges’ (C-134/23), a request for a preliminary reference from the Greek Council of State concerning the interpretation of Article 38 of Directive 2013/32/ EU on common procedures for granting and withdrawing international protection.

Read on EU Law Live

Court of Justice: Procedure awarding public contract divided into lots is not precluded by principles of transparency and equal treatment in the Public Procurement Directive

Thursday 13 June

The Fourth Chamber of the Court of Justice has rendered its judgment in a case concerning a preliminary ruling request from the Court of Appeal for the Eastern Region, Denmark, seeking to clarify, in the context of a procedure for the award of a public contract divided into lots, the scope of the principles of transparency and equal treatment, and of the resulting prohibition on negotiation: BibMedia (C-737/22).

Read on EU Law Live

Court of Justice: Commission has no jurisdiction to assess compatibility of measure with State aid rules, without first classifying the measure as State aid

Thursday 13 June

The Second Chamber of the Court of Justice delivered its judgment in a case on appeal brought by the European Commission against the judgment of the General Court in Case T-469/20, the latter concerning the applicant’s claim that the Court should annul Decision C(2020) final 2998 of the European Commission of 12 May 2020 on State aid SA.54537 (2020/NN) – Prohibition of coal for the production of electricity in the Netherlands: Commission v Pays-Bas (Appréciation de compatibilité d’une mesure non qualifiée d’aide d’État) (C-40/23 P).

Read on EU Law Live

AG Campos Sánchez-Bordona: Directive 2006/123 does not preclude national rules which prohibit the joint pursuit of professional activities where this may give rise to a conflict of interests

Thursday 13 June

Advocate General Campos Sánchez-Bordona handed down his Opinion in Tecno*37 (C-242/23), a request for a preliminary reference from the Italian Council of State concerning the free provision of services.

Read on EU Law Live

Advocate General Richard de la Tour’s Opinion on judicial cooperation and European Arrest Warrants

Thursday 13 June

Advocate General Richard de la Tour’s Opinion, delivered in Case C-305/22, addresses a preliminary ruling request from the Curtea de Apel Bucureşti (Court of Appeal, Bucharest, Romania), which concerns the interpretation of Council Framework Decision 2002/584/JHA on the European arrest warrant (EAW) and Council Framework Decision 2008/909/JHA on the mutual recognition of judgments imposing custodial sentences for their enforcement in another Member State.

Read on EU Law Live

AG Richard de la Tour’s Opinion on data collection necessity in criminal proceedings

Thursday 13 June

Richard de la Tour delivered his Opinion in case C-80/23 Ministerstvo na vatreshnite raboti (Enregistrement de données biométriques and génétiques II) concerning a preliminary ruling on the application of Directive (EU) 2016/680.

Read on EU Law Live

AG Campos Sánchez-Bordona suggests Court of Justice finds preliminary reference from the French High Council of Statutory Auditors inadmissible

Thursday 13 June

Advocate General Campos Sánchez-Bordona whatsapp rendered his Opinion in a case concerning a preliminary ruling request on whether Article 25 of the Services Directive must be interpreted, having regard in particular to the provisions of Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts and of Regulation (EU) 537/2014 on specific requirements regarding statutory audit of public-interest entities, as precluding national legislation which prohibits statutory auditors and audit firms from carrying out any commercial activity, whether directly or through an intermediary: Fautromb (C-368/23).

Read on EU Law Live

AG Richard de la Tour interprets structural arrangements required of Member States’ resolution authorities pursuant to Article 3(3) of Directive 2014/59

Thursday 13 June

Advocate General Richard de la Tour delivered his Opinion in Getin Holding and Others (C-118/23), a request for a preliminary ruling from the Regional Administrative Court, Warsaw, concerning the interpretation of Article 19(1)(2) TEU, Article 47 CFR, and Articles 3(3) and 85(2) and (3) of Directive 2014/59 on the recovery and resolution of credit institutions. Read on EU Law Live

AG Collins: Article 19(1)(2) TEU does not preclude national laws reducing judges’ remuneration provided that these are based on relevant, objective, and verifiable criteria

Thursday 13 June

Advocate General Collins delivered his Opinion in Sąd Rejonowy w Białymstoku (C-146/23) and SR and Others v. Lietuvos Republika (C-374/23), two requests for a preliminary reference concerning the interpretation of Article 19(1)(2) TEU.

Read on EU Law Live

Trans-European Transport Network Regulation adopted by the Council: advancing sustainable connectivity across Europe

Friday 14 June

The Council officially adopted a revised regulation for the development of the Trans-European Transport Network (TEN-T), aimed at creating a reliable, seamless, and sustainable transport network throughout Europe.

Read on EU Law Live

EU report highlights erosion of freedoms in Hong Kong

Friday 14 June

The European Commission and the High Representative released the 26th annual report on Hong Kong’s political and economic developments, covering 2023, detailing a significant decline in fundamental freedoms in Hong Kong.

Read on EU Law Live

Commission initiates anti-dumping investigation on decor paper imports from China

Friday 14 June

The European Commission initiated an anti-dumping investigation following a complaint from four EU producers alleging that decor paper imports from China are being dumped, causing injury to the EU industry.

Read on EU Law Live

First pharmaceutical cartel case in the EU: Commission sends Statement of Objections to Alchem International

Friday 14 June

The European Commission informed Alchem International Pvt. Ltd. and its subsidiary Alchem International (H.K.) Limited of its preliminary view that they have participated in a cartel concerning the pharmaceutical ingredient N-Butylbromide Scopolamine/Hyoscine (SNBB).

Read on EU Law Live

Commission Decision (EU) 2024/1675 on State aid granted by Romania to Blue Air Aviation SA, published in OJ

Friday 14 June

Official publication was made of Commission Decision (EU) 2024/1675 of 16 February 2024 on the State aid SA.62829 (2023/C) implemented by Romania for Blue Air Aviation SA.

Read on EU Law Live

Commission initiates in-depth investigation concerning support measures awarded to German public transport company

Friday 14 June

The European Commission opened an in-depth investigation to assess whether support measures to German local public transport company WestVerkehr are compatible with EU State aid rules.

Read on EU Law Live