TABLE OF CONTENTS
IN-DEPTH:
Three Questions to rule (on) them All: the full Court Hearing in the Case Commission v. Hungary on the Justiciability of EU Values against Member States (C-769/22)
Walter Bruno
Balancing the Prevention, Investigation, Detection and Prosecution of Criminal Offences against Privacy and Data Protection: Bezirkshauptmannschaft Landeck (C-548/21)
Tiago Sérgio Cabral
A new Principle of Procedural Consumer Law born out of a Decision about the Mortgage Credit Directive? With a Complementary Example of Silo Thinking (Case C-76/22, Santander Bank Polska)
Fabrizio Esposito
Recent Development of the Application of the Rules discharge Procedure in the European Union Insolvency Law: Corván and Bacigán (C-289/23 and C-305/23)
Remigijus Jokubauskas
Balancing Contracts and State Aid in EU Law: the Court’s expansive Take on Public Works Contracts (Case C-28/23)
Javier Miranzo Diaz
Modifications of Concession Contracts to correct for Negligence? No Way! Consider the Past, take care of the Present and foresee the Future! (Case C-683/22)
Sarah Schoenmaekers
Organic Flaw: the CJEU wrestles with a drafting Error in different Language Versions
Elijah Granet
SYMPOSIUM COMPETITION CORNER: ARTICLE 102 EXCLUSIONARY GUIDELINES: CODIFICATION OR RESTATEMENT?
Relative Efficiency to the Rescue of the Draft Guidelines on Exclusionary Abuses
Pablo Solano Díaz
THE LONG READ:
A Modest Proposal for an EU Regulation on Football Governance: If not the EU, then who?
Jan Exner & Stephen Weatherill
HIGHLIGHTS OF THE WEEK
IN-DEPT H
Three Questions to rule (on) them All: the full Court Hearing in the Case Commission v. Hungary on the Justiciability of EU Values against Member States (C-769/22)
Walter Bruno
On 19 November 2024 the most extensive formation of the Court of Justice, the Full Court, heard the parties in the case Commission v. Hungary (C-769/22) – a landmark case on EU values. This infringement action targets the so-called ‘anti-LGBTQ+ law’ passed by Orban’s government in 2021. The case and its hearing have been exceptional in many ways, not only for the formation of the Court and the large public audience attending, but also for the long list of Member States –sixteen– that intervened in support of the Commission. Such an unprecedented setting left Hungary isolated in the Grande Salle of the Court, as previously seen in the Council. Moreover, the Commission decided to mobilise EU values at the core of their claim in a unique way.
The Three-Level Claim of the Commission and the Hungarian Response
The infringement action originates from a Hungarian law ‘adopting stricter measures against persons convicted of paedophilia and (…) for the protection of children’ adopted in 2021. In particular, this law targets content that allegedly ‘promotes or portrays’ ‘divergence from self-identity corresponding to sex at birth, sex change or homosexuality’ addressed to minors. The argument of the Commission is that such a law discriminates against people on the basis of sexual orientation and gender identity. Moreover, the Hungarian measures create direct discrimination against LGBTQ+ people not only by causing alienation, but also by resulting in a systemic and deliberate attack to the functioning of the internal market, the EU legal order, and the European society.
The Commission built a three-level claim. On the first level, the guardian of the Treaties denounces a violation of several instruments of secondary law, including: the Audiovisual Media Services Directive, the e-Commerce Directive, the Services Directive and the GDPR . On the second level, such infringements also result in violations of certain articles of the Charter of Fundamental Rights: 1 (human dignity), 7 (respect for private and family life), 8 (protection of personal data), 11 (freedom of expression and information), 21 (non-discrimination). On a third level, altogether these measures infringe Article 2 TEU: the values of the EU.
During the hearing, the Hungarian government defended its own measures, by affirming that the Commission misunderstood its legislation, and that the measures do not intend to prohibit all content. However, the sensitivity of minors should be considered, and their education should fall in the domain of parental responsibility, rather than schools or public media.
The debate held during the hearing, which mostly tested the position of the Commission, and the statements of the Member States offer fertile ground for fundamental considerations, which will be expanded elsewhere. Among them, one subject played the most prominent role: whether and how Article 2 TEU can be invoked in an infringement action. In the following passage, it is useful to address three questions that can convey the most relevant matters and offer an overview of a few decisive issues.
Did the Commission and the Member States Succeed in Showing the Gravity of the Violation as being Worth Invoking EU Values in Article 2 TEU?
The claim based on Article 2 TEU has been justified by the Commission and most of the intervening states by the gravity of the violations, i.e., in the words of the Commission: their ability to affect the very fabric of society.
This unprecedented fashion of evoking EU values, as much as the strong position shown by so many Member States sounded like an emergency call for the Court: to respond to such a large threat, they request the mobilisation of EU values as a barrier safeguarding the EU society. However, to justify the mobilisation of values, it is necessary to demonstrate the gravity of the situation. The relevance of this point has been expressed by a question coming from Judge Ziemele on the basis of arguments presented by Belgium: ‘Is the Commission acting in the context of self-defending democracy? Is it really that at stake?’
The Commission and most of the Member States justified the mobilisation of values by adopting two parameters: the seriousness and the systemic (or structural) nature of the purported violations, assessed in a holistic approach. The first invites the Court to consider the substance of each breach of primary and secondary law and identify its seriousness when the infringement goes beyond the sum of individual violations of fundamental rights. The second parameter is activated when the vitiated measures are part of a widespread and coordinated policy.
Luxembourg and Finland stressed that the infringements must be cumulative, not isolated. The Netherlands and Belgium invoked the deliberate character of the violation. The latter State, through a thought-provoking pleading by Liesbet Van den Broek, interestingly proposed adopting Articles 17 and 18 of the European Convention on Human Rights on abuse of rights as an interpretative tool. Malta mentioned, as a condition, the threat to the proper functioning of the Union and its procedures. The terminology of an ‘emergency call’ for the Court has been widely shared.
Nevertheless, the Commission had a few difficult moments in its question time, when explaining the consequences of making such a serious claim. First of all, the Commission nuanced the free-standing nature of the claim based on Article 2. When asked whether the Commission would pursue legal action under article 260 TFEU if Hungary withdrew the legislation, the representatives strongly replied that they would terminate their action if Hungary eliminated all sources of discrimination. However, by doing so, they made the violation appear more circumstantial compared to the first phase of the pleading. Indeed, Advocate General Ćapeta followed up, asking how a prospective separate breach of Article 2 TEU found by the Court would affect the regime of mutual trust, e.g. in the domain of judicial cooperation. In fact, if the magnitude of the violation is that radical, it would
affect LGBTQ+ people beyond the domains of the policy contested, leaving them exposed even after a possible withdrawal of the legislation. The Commission replied that each field follows different criteria to determine a violation (e.g. those enshrined in LM case law for the European Arrest Warrant, C-216/18 PPU). On this point, Belgium validly overrode the Commission, by affirming that, for example, such a recognised breach should definitely have an (indirect) impact when assessing the status of the national legal order, according to the LM criteria. Ultimately, the Commission adopted a prudent view by affirming that the claim based on Article 2 TEU is separate, but not autonomous and with limited systemic consequence.
What is, then, the Added Value of Invoking EU Values?
While the Commission ‘played it safe’ about the separate-not-autonomous nature of the claim, the Member States offered a wide range of nuances about the ‘free-standing’ character of Article 2 violations.
Belgium argued in favour of Article 2 TEU as a ‘fondement unique’ of an infringement action, as a last-solace resource for a self-defending democracy. Malta proposed that Article 2 TEU can represent a self-standing ground of review only under specific conditions. Other Member States, including Ireland, Spain, the Netherlands, and Finland, adopted a position which is closer to the Commission’s. The European Parliament also advanced a more in-depth consideration. On the one hand, it rejected the possibility of invoking Article 2 TEU independently. On the other, it argued that invoking EU values only makes sense if it has a further role, compared to the Charter. And this is why a qualitative assessment is needed, more than a quantitative one.
On this same line, the Parliament and some Member States advanced an important argument linking the binding nature of EU values to the Copenhagen criteria and Article 49 TEU: a European State is called upon to respect the values listed in Article 2 TEU at the moment of its accession to the EU. Its membership, however, does not terminate its obligation to respect them, according to the principle of non-regression. By ratifying the Treaty of Lisbon, all Member States have committed themselves to the respect of the Treaties, including Article 2 TEU, and the Charter.
This first systemic argument should be seen as the basis for expanding on the true systemic effect that an ascertained violation of Article 2 TEU would trigger. Asked about the practical implications of such an event, the Commission indeed developed its arguments. First, the judgment would have a declaratory value in attesting that the violations go beyond individual provisions of primary and secondary law. Second, that ruling would have a direct impact on the sanctions imposed on the condemned Member States in the procedure under Article 260(2) TFEU. In that framework, the gravity of the violation represents an aggravating factor for the determination of penalties. Third, the symbolic value would be of great importance to the community affected by this measure, acknowledging that the EU stands to protect them with the strongest position.
To those elements, Belgium, from the point of view of a Member State, argued that such a violation would be an element that the Council would have to weigh when considering the pursuit of the political procedure under Article 7 TEU.
What is the Scope of Article 2 TEU? A Tricky Navigation through Articles 2, 7 TEU, 258 TFEU: EU Competences and Beyond
The issue of the systemic impact of a declared breach of EU values necessarily implies questioning what the scope of Article 2 is, and in what framework such a violation could be claimed.
On a first level, the question is whether it is possible to find a violation of Article 2 outside the scope of EU law. As observed by several judges and parties in connection with Article 49 TEU, the principle of non-regression binds the Member States’ legal systems as a whole. Certainly, as noted by the Commission, this should not overstep onto the competences of national constitutional organs, in other words: Article 4(2) TEU.
Such considerations find some arguments in their favour and a few complications. First, on this point, the Commission has been prudent. When asked about this, the representatives reiterated that a connection with EU policies is needed. They justified this position with the limited scope of the infringement procedure: a violation should be found within the scope of EU law. However, within the crisis of the framework of the rule of law, the Court found violations of Article 19 TEU even in the field of judicial organisation (ASJP, C-64/16).
Moreover, Malta advanced important arguments in this regard. Interrogated by the Court, they elaborated a test to trigger Article 2 TEU: a violation should occur within the exclusive or exercised shared competence of the EU or, even outside these competences, when the ‘institutional functioning of the Union and its procedures’ are affected, connecting the values not only with Article 19 TEU, but also to Article 10 TEU (which refers to democracy) and to Article 13 TEU (according to which ‘the Union shall have an institutional framework which shall aim to promote its values’).
On a second level, a few questions focused on the eventual overlap between the political procedure of Article 7 TEU and the infringement procedure. Similar to the reasoning in the Conditionality Regulation judgment, the Commission, supported by the Parliament and many Member States, rightfully replied that the two procedures are of different natures and they can coexist.
The Rest will be History
Advocate General Ćapeta announced the publication of her Opinion on 5 June 2025. Based on her valuable contributions to recent ‘constitutional’ cases, this assessment will further shape the outcome of the case. One year ago, the Opinion in KS and KD (point 155, C-29/22 P) affirmed that ‘a violation of fundamental rights cannot be a political choice in the EU’. Will she extend the same to values?
The Commission pleaded this case in days characterised by tension inside and outside the EU, with important elections and changes ahead. Therefore, it is legitimate to wonder how the political context and its repercussions on EU values will change in the next year and how the upcoming judgment will impact them.
Walter Bruno, LLM College of Europe, is a Doctoral Researcher at the Luxembourg Centre for European Law (University of Luxembourg). His thesis in EU procedural law investigates strategic litigation before the Court of Justice of the EU.
Bruno, W.; “Three Questions to rule (on) them All: the full Court Hearing in the Case Commission v. Hungary on the Justiciability of EU Values against Member States (C-769/22)”, EU Law Live, 25/11/2024, https://eulawlive.com/op-ed-three-questions-to-rule-on-them-all-the-full-court-hearing-in-thecase-commission-v-hungary-on-the-justiciability-of-eu-values-against-member-states-c-769-22/
Balancing the Prevention, Investigation, Detection and Prosecution of Criminal Offences against Privacy and Data Protection: Bezirkshauptmannschaft Landeck (C-548/21)
Tiago Sérgio Cabral
1. Background
The Court of Justice’s decision in Case C- 548/21 (Bezirkshauptmannschaft Landeck) probably got less attention than it deserved from legal scholars due to being issued at the same time as other high profile data protection cases and connected to Directive 2016/680/EU (the ‘Law Enforcement Directive’) instead of the GDPR . However, there are good reasons to engage in a deeper analysis of this case. The Bezirkshauptmannschaft Landeck judgment addresses access by law enforcement to mobile phones, which nowadays store large amounts of personal data that most people prefer to maintain private, but that law enforcement considers key for criminal investigation purposes. The Court of Justice’s conclusions regarding this issue are surprising as they seem out of step with previous caselaw. Other less controversial but still relevant takeaways from this judgment, such as those regarding the scope of the concept of ‘personal data’ may have relevance beyond data protection in the context of law enforcement.
2. The Court of Justice’s Decision
The case arises from a request for a preliminary ruling from the Regional Administrative Court of Tyrol (Austria). The factual background of the judgment is relatively straightforward: Austrian customs authorities seized a package for a data subject (CG) containing 85 grams of cannabis. Pursuant to this seizure, law enforcement conducted a search of CG’s residence, questioned him, and requested access to connection data on CG’s mobile telephone. CG refused and, as such, law enforcement seized his mobile phone, including SIM and SD cards.
Police officers made two (unsuccessful) attempts to unlock CG’s mobile phone. Both attempts were carried out at the personal initiative of the police officers concerned, without the authorisation of the Public Prosecutor’s Office or a court (para. 23). The mobile phone was eventually returned to CG after he challenged the lawfulness of the seizure.
The data subject was not, however, adequately informed of the attempts to access the information on his phone. In fact, he only became aware of such attempts when one of the police officers involved was questioned in the context of the subsequent judicial proceedings. The abovementioned attempts were also not recorded in the file compiled by law enforcement regarding this case (para. 25).
Considering that the attempt to access CG’s mobile telephone was unsuccessful, the Court of Justice was required to preliminarily assess whether such an attempt could be considered by itself as the processing of personal data.
The Court of Justice concluded that taking into account the broad scope that the European legislator intended to give to the concept of ‘processing’, along with the objectives of the Law Enforcement Directive, an attempt to access personal data contained in a mobile phone by a law enforcement authority should be considered processing of personal data even if unsuccessful.
The Court of Justice also noted that the opposite interpretation would create a situation in which the applicable rules would not be foreseeable to the person trying to access the data (or to data subjects). Authorities would see the consequences of their conduct depend on the success of the attempt while individuals could have their rights denied because the law enforcement authority failed in its designs (para. 76).
After rejecting objections from some Member States and reformulating the referring court’s questions, the Court of Justice focused on clarifying whether Article 4(1)(c) of Directive 2016/680, read in the light of Articles 7 and 8 of the Charter of Fundamental Rights of the EU (‘CFREU’) and Article 52(1) of the latter legal instrument, precludes national legal rules which afford the competent authorities the possibility of accessing data contained in a mobile telephone for the purposes of preventing, investigating, detecting and prosecuting criminal offences in general, and which do not make this possibility subject to prior review by a court or an independent administrative body (para. 81). To respond to this question, the Court of Justice recalled that any restrictions to the rights under Article 7 and Article 8 of the CFREU should follow the rules established in Article 52 of the CFREU and, as such, must ‘be provided for by law, respect the essence of those fundamental rights and observe the principle of proportionality. Under the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the European Union or the need to protect the rights and freedoms of others. They must apply only in so far as is strictly necessary and the legislation which entails the limitations in question must lay down clear and precise rules governing the scope and application of those limitations’ (para. 85; for more development on this issue see Alessandra Silveira, ‘Commentary to Article 52’, in Alessandra Silveira, Tiago Sérgio Cabral et al., The Charter of Fundamental Rights of the European Union: A Commentary, Braga, UMINHO Law School, 2024, pp. 477-486). In assessing the processing in casu, the Court of Justice concedes that access to personal data stored in a mobile phone may constitute a serious or even a particularly serious interference with the fundamental rights under Article 7 and 8 of the CFREU. To support this conclusion, the Court of Justice highlights that special category data may be stored on the mobile phone and, as such, accessed by law enforcement. However, this is not sufficient for the Court of Justice to conclude that such access should be limited to the fight against serious crime, as this would lead to an increased risk of impunity for criminal offences given the importance that such data may have for criminal investigations, and therefore hinder the activities of law enforcement (para. 97).
Access should be preceded by review by a court or administrative authority which must strike a balance between the interests of the investigation and the rights of the data subject. In cases of duly justified urgency, this review can occur shortly after the access instead of prior to it. Reasonable suspicions in relation to that person should also be supported by objective and sufficient evidence for this access to be lawful (para. 101)
In order to satisfy the requirement under Article 52(1) of the CFREU, which states that any limitation to the fundamental rights must be provided by a law that establishes the scope of the limitation in a sufficiently clear and
precise manner (para. 98), the Court of Justice states that national laws should define the factors with sufficient precision, in particular the nature or categories of the offences concerned (para. 99).
Lastly, in responding to the third question of the referring court, the Court of Justice concludes that data subjects should be informed of the access to their equipment and the grounds authorizing such access as soon as doing so is no longer liable to jeopardise the investigations carried out by law enforcement. A national rule completely excluding this right would be incompatible with EU law (paras. 120 and 121).
3. Commentary
The Court of Justice decided well when it rejected arguments from several governments, including the Austrian and French governments, which argued that the incorrect formulation of the first two questions – as being issues related to the e-Privacy Directive (Directive 2002/58/EC) instead of the Law Enforcement Directive – precluded the Court of Justice from responding to them. In rejecting this argument, the Court of Justice stressed that it sent a request for information to the referring court, by which it asked whether the Law Enforcement Directive might be relevant in the dispute in main proceedings (paras. 31-33). After the referring court confirmed this, the interested persons were notified of this development and able to, in their written observations, express their views on the interpretation of that Law Enforcement Directive and its relevance to the case in the main proceedings. In addition, for the purposes of the hearing, the Court of Justice asked the participants in the oral part of the procedure to answer, at that hearing, certain questions concerning the Law Enforcement Directive (para. 63).
The reality of the matter is that the State (executive) should not benefit from an error by the State (judiciary) at the expense of individual fundamental rights. It is not acceptable that individuals be deprived of or even see delayed their right to an effective remedy and to a fair trial (Article 47 of the CFREU) because of an error in the identification of the applicable law that was detected at an early stage of the proceedings at the Court of Justice. This conclusion is strengthened when the discussion is purely formal and very close to a delaying tactic by the governments, as they were able to present their arguments without significant issues.
The broad interpretation of personal data processing adopted by the Court of Justice may have relevance outside of the scope of the Law Enforcement Directive and for the GDPR. As the concepts are the same and should be interpreted in a coherent manner, the Court of Justice’s position would mean that someone who tries to break encryption to access personal data might be considered as a controller even if failing in this attempt (e.g., threat actors in a data breach context).
Where it seems to us that the Court of Justice’s decision may have failed is in giving sufficient consideration to the impact that access to mobile devices may have on a data subject’s right to data protection (Article 8 of the CFREU) and privacy (Article 7 of the CFREU). The Court of Justice notes that special category data may be saved on the mobile device and thus accessed. We would consider that, nowadays, this is likely not a ‘may’ but a ‘likely will’. Particularly, smartphones are very likely to contain (large sets of) special category data, such as messages containing political or religious positions or health information stored in apps, messages or
emails. Access to the pictures may also reveal special category data but, even if it does not, is extremely intrusive and should only be accepted in exceptional circumstances. The same argument could be made for financial data contained in mobile devices. In not giving sufficient prominence in this judgment to how serious the impact of law enforcement access to mobile phones is on privacy and data protection, the Court of Justice fails to provide guidance to national courts and authorities that will have to conduct a proportionality test. Paragraphs 107 and 108 of the judgment do not do much more than repeat the data minimisation principle and argue that it should be interpreted with particular rigour.
The issue becomes more serious because the Court of Justice does state that access to the data in mobile devices should not be restricted for the fight against serious crime, accepting that the lack of access to this information would hinder the work of law enforcement and create an increased risk of impunity for criminal offences, and would introduce a deviation, without clear reason, from its case-law on access to metadata (see, for example, Prokuratuur (C-746/18, para. 35), Ministerio Fiscal (C-207/16, para. 54), and La Quadrature du Net (C-470/21, para. 95). It is difficult to argue that direct access to a mobile device cannot allow law enforcement to draw precise conclusions concerning the private lives of the persons concerned in a manner that is probably even more damaging to the fundamental rights of privacy and data protection than access to metadata stored by a thirdparty. The statement that restricting this type of processing operation in the fight against serious crimes would hinder the work of law enforcement is also no more than an incomplete argument. Certainly, the work of law enforcement would be easier with complete and unrestricted access to all personal data stored in all terminals and databases. However, there is a balance to strike between the important work of law enforcement and a person’s right to privacy and data protection. The Court of Justice failed in justifying why the first interest should prevail over the individual rights in this case when it does not in its previous case-law. Considering the extreme restriction to fundamental rights that arises from access to a mobile device by law enforcement and the low social relevance of minor crimes, the Court of Justice’s conclusion may not be the right one.
Even if it did not restrict access for the purpose of fighting against serious crime, to avoid a highly securitarian approach the Court of Justice should have clarified that national courts or authorities must not rely blindly on law enforcement authorities and, considering the wide scope of the restriction to the abovementioned fundamental rights, are at least required to: (i) carefully assess whether reasonable suspicions exist and if there is sufficient evidence to support them. Evidence should exist a priori and, thus, law enforcement should not be able to access mobile devices with the aim of ‘fishing’ for evidence; (ii) critically evaluate whether it is possible without extreme difficulty to rely on less intrusive means to seek additional evidence of unlawful activity; (iii) even if reasonable suspicions exist and there are no less intrusive means are available, assess if the public interest in the specific case prevails over the rights of the individual, considering the type of device and the categories of personal data likely to be stored within, along with the fact that any access will likely not be restricted to the personal data of the person under suspicion, but will also affect third parties. Particularly for less serious crimes, it is our view that the balance should frequently favour individual rights.
Tiago Sérgio Cabral is a lawyer working on Technology, Privacy, Data Protection, Cybersecurity and Artificial Intelligence. He is also a Researcher at the Research Centre for Justice and Governance – EU Law (University of Minho, Portugal).
Sérgio Cabral, T.; “Balancing the Prevention, Investigation, Detection and Prosecution of Criminal Offences against Privacy and Data Protection: Bezirkshauptmannschaft Landeck (C-548/21)”, EU Law Live, 26/11/2024, https://eulawlive.com/oped-balancing-the-prevention-investigation-detectionand-prosecution-of-criminal-offences-against-privacy-and-data-protection-bezirkshauptmannschaft-landeck-c-548-21/
A new Principle of Procedural Consumer Law
born out of a
Decision about the Mortgage Credit Directive? With
a
Complementary Example of Silo Thinking (Case C-76/22, Santander Bank Polska)
Fabrizio Esposito
In Santander Bank Polska (C-76/22), the Court of Justice answered two questions concerning the interpretation of Article 25(1) of the Mortgage Credit Directive 2014/17. The provision reads as follows: ‘Member States shall ensure that the consumer has a right to discharge fully or partially his obligations under a credit agreement prior to the expiry of that agreement. In such cases, the consumer shall be entitled to a reduction in the total cost of the credit to the consumer, such reduction consisting of the interest and the costs for the remaining duration of the contract’.
The controversy is about the consumer’s right to be reimbursed for part of the commission for granting the loan –and if so, how to calculate the sum. The total cost under consideration is 2,600 PLN, of which the consumer asked for the reimbursement of 2,462.78 PLN (respectively, approximately 600 and 570 EUR).
The first question concerns the identification of the total costs of credit. The point is controversial since, despite the plain meaning of Article 25(1), referring to (all) total costs, the Court of Justice has offered a restrictive interpretation thereof in UniCredit Bank Austria (C-555/21).
The second question concerns the identification of the method to calculate the amount of the total costs to be reimbursed. On this point, of apparent practical relevance, the Court of Justice asked Advocate General Campos Sánchez-Bordona to deliver an Opinion.
The Court of Justice answers the first question in favour of the consumer on procedural grounds: the bank failed to discharge its burden of proof. The second question is, instead, answered in favour of the national legal system: the Court of Justice finds that the directive establishes only general requirements that calculation methods need to comply with.
I will divide my analysis into two parts, followed by final remarks. Each part focuses on a question and combines a description of the reasoning of the Court of Justice and, where relevant, the Advocate General, with some critical remarks.
In a nutshell, I believe that the Court of Justice might appear too harsh with the bank on the first point, but the answer is ultimately convincing and potentially far-reaching. However, the Court of Justice should have performed a systematic analysis in its second answer, considering in particular the implications of the contra proferentem rule of contractual interpretation in the main proceedings.
First Question: A New Principle of Procedural Consumer Law?
To answer the first question, the Court of Justice develops on the non-obvious implications for the rules of evidence established by its ruling in UniCredit Bank Austria.
In fact, the Court of Justice notes that UniCredit Bank Austria restricted the right to reimbursement to exclude costs that are independent of the duration of the agreement. In said occasion, the duty to provide pre-contractual information about the breakdown of costs was crucial to address concerns about the possible abuses of this exception so that the professional ‘was required to show whether the costs concerned are regular payments’ or not (UniCredit Bank Austria, para. 38).
In the decision at hand, the Court of Justice implies that a payment being in a single instalment is insufficient to demonstrate that ‘that charge falls within the costs that are independent of the duration of the agreement’ (para. 34).
This finding might sound too harsh. After all, the commission for granting the loan seems to be a cost that is independent of the duration of the agreement. However, according to Article 4 of Directive 2014/17, the definition of ‘total cost of the credit for the consumer’ explicitly includes the ‘cost of valuation of property’, which also seems to be independent of the duration of the agreement but which the EU legislator chose to make reimbursable nevertheless. Thus, in this area, common sense does not provide the best guidance on how to draw the line on what can be reimbursed.
At this point, the Court of Justice notes that the information that is missing in the main proceedings is part of the pre-contractual information that the credit institution must provide to the consumer according to Article 14 of Directive 2014/17. This is crucial.
In fact, the Court of Justice holds that it must be ‘ensure(d) that the consumer is not adversely affected by that absence of information’ (para. 37). On these grounds, the Court of Justice concludes that the consumer is entitled to the partial reimbursement of the commission of granting the loan.
The answer to this question is noteworthy because I see two possible outcomes with different institutional implications. On the one hand, the Court of Justice could have decided that the commission for granting the loan falls within the concept of costs that are independent of the duration of the agreement. The immediate implication: encouraging banks not to submit the pre-contractual documentation so as to argue later that it is evident that the exception should apply.
On the other hand, the Court of Justice could have chosen to restrict the power of national judges to infer from incomplete evidence that the exception should apply. This is the solution that prevailed, possibly with farreaching consequences. In fact, this solution goes well beyond the interpretive criterion that exceptions should be interpreted restrictively: the Court of Justice moves beyond the interpretation of the provision and establishes evidentiary restrictions.
It seems to me that the Court of Justice has created nothing less than a general principle of procedural consumer law: professionals must submit pre-contractual information, or courts will find in favour of consumers even if the available evidence could reasonably lead a judge to rule in favour of the professional. Indeed, I see no reason to limit the scope of the reasoning to the application of Article 25(1) of Directive 2014/17.
Second Question: An Illustration of the Perils of Silo Thinking
The answer to the second question denotes a high level of attention to the institutional division of powers between the European Union and Member States. However, as I will argue below, both the Advocate General and the Court of Justice failed to appreciate the implications of the contra proferentem rule of interpretation established by Article 5 of the Unfair Contract Terms Directive 93/13
Following the Opinion of the Advocate General, the central premise of the reasoning of the Court of Justice is that Recital 66 of Directive 2014/17 demonstrates that Member States have broad discretion in establishing the conditions under which reimbursement to the consumer is possible. It follows that as long as the consumer enjoys a high level of consumer protection, any method is acceptable. Notably, Recital 66 is more precise in this regard than the ruling, since it provides guidance on how to ensure that the credit institution receives a compensation that does ‘not exceed the financial loss of the creditor’.
Against this background, the following points are noteworthy. The Advocate General notes that the Commission, the Polish government, other Polish courts, and even the referring court side with the consumer in the main proceedings. In their view, the reduction should be proportional: if termination is 25% earlier than agreed, the consumer receives 25% back; if it is 30%, 30% back; and so on.
Instead, the bank claims that the reimbursement should be proportional not to time, but to lost interest. The consumer stressed that in the case of variable interest rates, the second method is hard to apply. The Advocate General dismisses this concern, noting that Article 25(4) imposes on the banking institution the duty to calculate the reimbursement on the basis of assumptions known in advance to the consumer, that are ‘reasonable and justifiable’.
The Court of Justice could have provided guidance on this point, but evidently chose not to do so. This caution is understandable and, I submit, laudable. Dziubak (C-260/18; see my commentary here) was exceptionally disrespectful to the Polish legal system (and, indirectly, all other Member States), and the Court of Justice probably also considered the well-known tensions between the Union and Poland regarding the judiciary.
The problem is that both the Advocate General and the Court of Justice have failed to explore the implications of the interplay between Article 13 of Directive 2014/17 and Article 5 of Directive 93/13.
As the Opinion of the Advocate General points out, the creditor has the duty to provide a ‘description of the conditions directly relating to early repayment’ pursuant to Article 13(1)(k). Said information is incorporated in the contract, so that Directive 93/13 applies. Article 5 of said directive establishes that ‘[w]here there is doubt about the meaning of the term, the interpretation most favourable to the consumer shall prevail’.
A doubt about the interpretation of the contractual clause establishing the mechanism to calculate the amount of the early reimbursement is the essence of the second referred question. As noted, the Opinion of the Advocate General exposes the existence of a doubt about the criterion to be used; still, it is clear that the consumer prefers one over the other and their view has broad institutional support at both European and national levels.
However, at no point is it considered that the doubt is not only about the interpretation of EU law, but also about the interpretation of the contract between the parties. In fact, Directive 2014/17 does not establish a criterion and leaves ample discretion to Member States. However, even if Member States do not exercise this discretion, the directive still requires the bank to make a clear choice at the pre-contractual information stage. At this point, Directive 93/13 imposes choosing the interpretation most favourable to the consumer.
Notably, in my analysis of the second question I assumed that a contractual term establishing the conditions for an early reimbursement existed but was unclear. It is not possible to consider here the implications of a failure to provide such a term. Especially in a situation where the national legislation has not provided an explicit term that can be used to integrate the contract, the implications of the lack of a potentially core term of the loan agreement could go as far as leading to contractual invalidity.
Final Remarks
Santander Bank Polska is an important decision, as it is often the case, mostly because of what it says implicitly but also does not say.
Implicitly, my view is that the Court of Justice has established a strict but broad rule of evidence: every time the pre-contractual information is the best evidence the professional could rely upon to prove something but fails to produce it in court, the professional cannot discharge the burden in another way.
The silence on the interplay between Directives 2014/17 and 93/13 is a powerful illustration of the risks of silo thinking within EU law (let alone between EU and national law or law and other disciplines).
It remains to be seen if the implicit procedural rule I extracted from the first answer will soon be made explicit and, why not, whether it will be extended to specify which types of evidence professionals must produce to ensure a high level of consumer protection at trial. I see a lot of risks, but also potential in this direction, especially in highly technical and complex areas (e.g., AI and addictive design).
Fabrizio Esposito is Associate Professor at the NOVA School of Law (Lisbon). His scholarship combines doctrinal analysis, especially of EU consumer and regulatory law, with economics and other disciplines. His monograph, ‘The Consumer Welfare Hypothesis in Law and Economics’, opens a new path in law and economics.
Esposito, F.; “A new Principle of Procedural Consumer Law born out of a Decision about the Mortgage Credit Directive? With a Complementary Example of Silo Thinking (Case C-76/22, Santander Bank Polska)”, EU Law Live, 28/11/2024, https://eulawlive.com/op-ed-a-new-principle-of-proceduralconsumer-law-born-out-of-a-decision-about-the-mortgage-credit-directive-with-a-complementary-example-of-silo-thinking-case-c-76-22-santanderbank-polsk/
Recent Development of the Application of the Rules discharge Procedure in the European Union Insolvency Law: Corván and Bacigán (C-289/23
and C-305/23)
Remigijus Jokubauskas
The saga over the discharge procedure in European Union insolvency law continues. The Court of Justice recently rendered the judgment in case Corván and Bacigán (C-289/23 and C-305/23) (hereinafter ‘the judgment’) which adds more considerations over the aims of the discharge procedure and raises questions over non-dischargeable debts. Though the judgment concerns various matters regarding the application of the Directive on restructuring and insolvency (2019/1023) (hereinafter ‘the Directive’), this Op-Ed focuses on the main questions raised before the Court, namely the access to the discharge procedure and the matter of non-dischargeable debts.
The Court of Justice was asked whether under Article 23(2) of the Directive a debtor may not enjoy access to the discharge procedure when he or she has acted in bad faith before the discharge procedure. The question concerned a situation where a debtor was penalised for serious tax offences before the filing for the opening of the discharge procedure. The Court found that by requiring payment of those non-preferred claims governed by public law, the legislature may be pursuing a legitimate public interest (para. 38) and the payment of non-preferred claims governed by public law following insolvency proceedings may be required to benefit from a discharge of debt, provided that that obligation is duly justified (para. 39). The Court found that Article 23(2) of the Directive must be interpreted as not precluding national legislation which excludes access to the discharge of debt in well-defined circumstances in which the debtor has not acted dishonestly or in bad faith (para. 44). The derogations to the access to the discharge procedure must also pursue a legitimate public interest (para. 46). Thus, the restriction of access to the discharge procedure, such as requiring the payment of non-preferred claims governed by public law to be able to benefit from a discharge of debt, may be established in national law. Also, the Court established that access to the discharge procedure may be excluded where the debtor has acted negligently or imprudently, without having acted dishonestly or in bad faith, or was penalised for a very serious tax offence, or for a social security offence or labour offence, or where the debtor has been the subject of a final decision to enforce secondary liability before the opening of the discharge procedure (para. 52).
Turning to the question of non-dischargeable debt, the Court of Justice found that the list of debts found in Article 23(4) of the Directive is not exhaustive, meaning that the national policymakers of the Member States may exclude other debts (para. 59). The Court also followed the position from previous case law where it found that the claims governed by public law may be also excluded from the list of dischargeable debts, if the satisfaction of these claims has particular importance for a fair and cohesive society, based on the rule of law (para. 67). Furthermore, it held that Article 23(4) of the Directive does not preclude the national legislation from establishing a general
rule excluding claims governed by public law from discharge of debt, in so far as that national legislation accords preferential treatment to public creditors over other creditors, provided that such an exclusion is duly justified under national law (para. 73).
Another question raised in this case was whether the national law may establish a ceiling for a specific category of debt above which the discharge is excluded. The Court of Justice found that since the Directive allows the Member States to exclude certain categories of debt from the list of dischargeable debts, it also does not preclude them from establishing limitations to be put in place in respect of the possibility of discharging debt (para. 78). However, the requirements for such limitations (a ceiling) should derive from national law or from the procedure which led to them, pursue a legitimate public interest (para. 79) and comply with the requirement of proportionality (para. 81). Thus, the Court held that the Directive allows the Member State to establish a limitation on the discharge of debt for a specific category of debts by establishing a ceiling above which that discharge is excluded, without that ceiling being fixed on the basis of the amount of the relevant debt, provided that that limitation is duly justified under national law (para. 82).
Thus, in essence, the Court of Justice found that the Member States enjoy the power to decide on two crucial aspects of the discharge procedure, namely access to the discharge procedure and non-dischargeable debts. The Court held that the right of access to the discharge procedure may be restricted in cases where an individual is penalised for serious violations of public (tax) law before the opening of the discharge procedure. Also, it established that the debts deriving from public law may be excluded from the list of non-dischargeable debts and that a certain ceiling may be established over the which the discharge is excluded.
The judgment, however, raises various questions, namely, certain points which the Court may have missed in the interpretation of the aims of the Directive and the discharge of debts procedure.
First, the Court of Justice followed its previous case law (Case Agencia Estatal de la Administración Tributaria, C-687/22) and held that the Member States enjoy significant discretion to choose from which debts an insolvent entrepreneur shall not be discharged after the discharge procedure. The main requirement is that due justification is needed. However, it remains rather mysterious as to what the requirement of due justification means and how the Member State should comply with the requirement. It seems that such an obligation for the justification of non-dischargeable debts is a formal one, rather than a substantive one.
Second, the judgment lacks any analysis of the main aim of the discharge procedure, which is to provide a fresh start (a second chance). The provisions of the EU law should be also interpreted in the light of their purpose (Case C-112/03, para. 28). The aim of the discharge procedure under the Directive is to provide a possibility for an insolvent entrepreneur to start entrepreneurship activities anew (Recitals 1, 4, 5, 72 of the Directive) which should be also coupled with a full discharge (Article 20(1) of the Directive). However, the Court of Justice did not provide any guidance on how the aim of a fresh start is (in)compatible with the rules on non-dischargeable debts under Article 23(4) of the Directive. The Court merely relied on the interpretation that the Member States enjoy significant discretion over the implementation of the Directive into national law and thus are entitled to decide on
the exclusion of certain categories of debt from the discharge procedure or to establish a ceiling above which the discharge is not provided. Similarly, it found that access to the discharge procedure may be restricted for various grounds (violation of laws) established in national law. Both elements of the discharge procedure (access to it and the categories of non-dischargeable debts) play a major role in whether the discharge procedure is effective or not. The restrictions to the access to the discharge procedure and the exclusion of public debts from the list of nondischargeable debts may significantly diminish the effectiveness of such procedure.
Third, the judgment lacks any assessment of the principle of equality of creditors. Similarly to the case Instituto da Segurança Social and Others (C-20/23), in this case the Court of Justice also dealt with discharge of claims deriving from public law. The Court itself has affirmed the principle of equality of creditors (pari passu) in previous cases in different contexts. For instance, it found in the cross-border insolvency cases that the claims of tax authorities do not enjoy any preferential treatment (Case C-212/15, paras. 39-40), and that public creditors similar to private creditors may establish the rights in rem (Case C-195/15, para. 32). In other words, the Court had, in these cases, treated a State similarly to any other creditor. However, the Court further keeps its silence over the question of whether the non-discharge of public debt is compatible with the principle of equality of creditors or not.
Fourth, the Judgment is (too) complicated to read. Though the Court of Justice joined two requests for the preliminary ruling which both related to rather similar problems, the arguments employed by the Court and the presentation of them are rather confusing. Not only as to the number of questions with which the Court dealt in this judgment, but also the complexity of the legal writing which makes it hard to read. For instance, the rule formulated for the interpretation of Article 23(1) and (2) of the Directive in para. 52 of the judgment is simply too long and complicated. Such complexity of the arguments raises the question of to whom the judgment is addressed and whether insolvent entrepreneurs around Europe will be able to perceive what results of the discharge procedure they may expect.
To sum up, the Court of Justice remains consistent in the interpretation of the list of non-dischargeable debts under Article 23(4) of the Directive, namely, that the list of non-dischargeable debts is not exhaustive and that the Member States enjoy significant powers to include other debts when they are duly justified and also to impose certain restrictions to the access to the discharge procedure. Nevertheless, the position of the Court in the judgment is rather formalistic and lacks the analysis on whether such interpretation addresses the aims of the discharge procedure (a fresh start). Again, when dealing with the main issues of the discharge procedure, the Court of Justice did not provide any arguments as to whether the non-discharge of claims governed by public law is compatible with the aim of a fresh start and the principle of equality of creditors.
Remigijus Jokubauskas is an attorney and an associate professor at Mykolas Romeris University (Lithuania) and teaches national and international insolvency law.
Jokubauskas, R.; “Recent Development of the Application of the Rules discharge Procedure in the European Union Insolvency Law: Corván and Bacigán (C-289/23 and C-305/23)”, EU Law Live, 26/11/2024, https://eulawlive.com/op-ed-recent-development-of-the-application-of-the-rules-dischargeprocedure-in-the-european-union-insolvency-law-corvan-and-bacigan-c-289-23-and-c-305-23/
Balancing Contracts and State Aid in EU Law: the Court’s expansive Take on Public Works Contracts (Case C-28/23)
Javier Miranzo
Diaz
The recent ruling of the Court of Justice in Case C-28/23 addresses critical legal issues related to the interpretation of public works contracts under Directive 2004/18/EC and Directive 2014/24/EU, when in potential conflict with State aid rules under EU law. This Op-Ed will focus on three key areas: (1) the main facts and argumentation of the Court, (2) the principal novelties in relation to previous case law, especially concerning public works contracts and State aid, and (3) the impact of this judgment on previous case law and some doctrinal works.
Main Facts and Key Elements of the Court of Justice’s Argument
In Case C-28/23, the Slovak Republic was involved in proceedings related to the construction of the Slovak national football stadium. The Ministry of Education and Sports entered into a grant agreement and an undertaking to purchase the stadium –if the option was exercised by the company, for whom the decision was fully discretionary–, raising the question of whether these agreements, concluded without a competitive tendering procedure, constituted a ‘public works contract’ under EU public procurement law.
The Ministry of Education and Sports itself challenged the agreements after the company exercised its option to sell the stadium to the Ministry, claiming that it actually was a covert public works contract which should be annulled. The national court raised this preliminary reference in which the Court of Justice was asked whether such an arrangement fell under the concept of a ‘public works contract’ as defined in Article 1(2)(b) of Directive 2004/18/EC and Article 2(1)(6)(c) of Directive 2014/24/EU.
The Court found that the set of agreements between the Slovak Republic and the contractor, NFŠ a.s., constituted a public works contract.
First, the reasoning was based on the fact that the agreements created reciprocal obligations: NFŠ was required to build the stadium according to the Ministry’s specifications, and the Slovak Republic had an obligation to purchase the completed stadium if this option was exercised by the company –on this last matter, the Court of Justice declared that the absence of an obligation to sell for the constructor is not necessarily sufficient to rule out the synallagmatic nature of that contract and, therefore, the existence of a public contract.
Second, despite arguments to the contrary, the Court emphasised that there was a direct economic interest of the contracting authority in the construction of the stadium so as to meet the criteria of a public works contract. This conclusion is perhaps the weakest from the Court of Justice and has led to some criticism, as it assumes, following Helmut Müller GmbH (C-451/08), a direct or at least sufficient economic benefit in the future use or transfer of the work, in the fact that it contributed financially to the realisation of the work, and in the assumption of risks if
the work were to fail economically. The first of these, however, would only occur in the context of non-profitability of the stadium’s exploitation by the company. The second is more of an investment or expense, not a benefit, and the third, again, consists of an assumption of risks, not a benefit in the strict sense (On this criticism, you can see the interesting reasoning of Sánchez-Graells in his Blog).
Additionally, the Court of Justice ruled that national laws that declare such contracts null and void ex tunc in cases of non-compliance with public procurement rules do not conflict with EU law, provided that the legislation complies with the general principles of EU law.
Principal Novelties and Divergences from Previous Case Law
This ruling introduces important clarifications on the boundaries of what constitutes a public works contract under EU law, particularly in cases where State aid is involved and the contracting authority has a significant influence on the design and execution of the project.
Previous case law, such as the Court of Justice’s ruling in Helmut Müller GmbH (C-451/08), had established that for a contract to be classified as a public works contract, the contracting authority must not only benefit from the outcome of the work but also exert decisive influence on the design of the project. In Commission v Austria (C-537/19), where the Court of Justice held that leasing agreements for a building yet to be constructed could be considered a benefit, and therefore classified as public works contracts if the contracting authority influenced the design specifications.
In C-28/23, the Court followed this line of reasoning but expanded the scope to include cases where the public authority may not directly own the property but exercises significant control over its construction, use and function, reinforcing the concept that the economic value and control of use can suffice to meet the criteria of a public works contract. But it also significantly expanded the concept of benefit or economic interest, where the assumption of risk by the Slovak Republic was considered critical as to assess the existence of the direct economic advantages. To this respect we can conclude that in order to assess economic interest, the risks assumed, and not only the benefits, are also of vital importance.
Impact on the academic debate
The judgment in C-28/23 also has implications for several ongoing academic debates surrounding the intersection of State aid and public procurement law. Scholars have long discussed the balance between market competition and the role of public authorities in influencing economic activity, particularly in the context of large infrastructure projects funded by the state. This ruling reinforces the interpretations of some authors in relation to the concept of public contract in EU law, such as Sue Arrowsmith or Christopher Bovis, who have emphasise the expansive definition of public contracts under EU law and the increasing tendency of the Court of Justice to prioritise economic reality over formalistic distinctions.
On the contrary, the judgment challenges positions held by scholars who have previously argued for a more restrictive interpretation of what constitutes a public works contract, especially in the context of State aid measures. Albert Sánchez Graells, in his work on competition and procurement, has criticized broad interpretations that might entangle State aid measures within procurement law unnecessarily (a position reiterated for this particular case in the abovementioned Sánchez-Graells’ Blog entry).
However, in this judgment the Court of Justice has made clear its commitment to ensuring that public procurement rules maintain their full effect, even when other areas are affected and even in cases where State aid has been authorised.
Final remarks
Although controversial, the Court of Justice’s judgment in Case C-28/23 represents a significant development in the interpretation of public works contracts and State aid under EU law. By confirming that the agreements between the Slovak Republic and NFŠ a.s. constituted a public works contract, the Court reinforced the principle that contracting authorities cannot circumvent public procurement rules by invoking State aid arrangements or complex contractual frameworks, this in turn reinforcing the pre-eminence of the former over the latter legal framework. If an arrangement meets the (functional) requirements of a public contract, the application of public procurement rules cannot be evaded even if arrangements comply with all the Staid Aid requirements. By confirming that the agreements between the Slovak administration and NFŠ a.s. constitute a public works contract, the Court effectively prevents public authorities from circumventing procurement rules through complex contractual mechanisms or the use of State aid.
Particularly significant is the Court’s emphasis on that fact that agreements involving substantial control by the public authority over the design and execution of works must be regarded as public contracts, irrespective of the contractual forms employed. On this matter, the judgment confirms come previous doctrinal analyses that support a broad and economically focused interpretation of public procurement law, particularly in cases where the public authority maintains a significant economic interest –not necessarily in the form of benefits– and control over the execution of the works. Despite the criticism and the possible inconsistencies regarding the concept of ‘economic interest’, this ruling will likely shape future discussions in both legal practice and academic discourse, particularly regarding the interaction between State aid and public procurement.
The implications of this ruling are likely to be far-reaching. It reinforces the idea that public works contracts and State aid are not mutually exclusive, and can overlap, requiring States to rigorously study the possible application of public procurement rules even when projects are financed through State subsidies or aid approved by the European Commission. This may lead to increased scrutiny by both national and European authorities, as well as pressure on public administrations to ensure strict compliance with procurement rules, even in infrastructure projects funded by state resources. In the long term, this judgment could deter the use of grants or contractual frameworks aimed at avoiding open competition, and may result in further litigation or review of contracts previously concluded under similar conditions.
Javier Miranzo Diaz is a lecturer of Administrative Law at the University of Castilla-La Mancha.
Mirano Díaz, J.; “Balancing Contracts and State Aid in EU Law: the Court’s expansive Take on Public Works Contracts (Case C-28/23)”, EU Law Live, 25/11/2024, https://eulawlive.com/op-ed-balancing-contracts-and-state-aid-in-eu-law-the-courts-expansive-take-on-public-works-contractscase-c-28-23/
Modifications of Concession Contracts to correct for Negligence? No Way! Consider the Past, take care of the Present and foresee the Future! (Case C-683/22)
Sarah Schoenmaekers
1. Facts
On 7 November 2024 the Court of Justice delivered its ruling in Adusbef (C-683/22) upon a preliminary reference from the Regional Administrative Court of Lazio (Italy) concerning the interpretation of Articles 38, 43 and 44 of Directive 2014/23/EU on the award of concession contracts.
The request was made in proceedings between Adusbef, a consumer association, on the one hand and the Italian Ministry of Infrastructure and Sustainable Mobility and several other governmental authorities on the other hand. It concerned the lawfulness of modifications made to a motorway concession that was awarded by the Italian Autonomous National Motorways Agency –later replaced by the Ministry of Infrastructure and Sustainable Mobility– and was held by Autostrade per l’Italia SpA (ASPI). These modifications were made following the collapse of the Morandi Bridge in Genoa, which formed part of the motorway that was to be operated by ASPIcausing the death of 43 persons. In the aftermath of the collapse, the Italian Ministry initiated proceedings against ASPI for serious failure to fulfil its obligations to maintain and preserve the motorway network. Nevertheless, in 2021 a settlement agreement (SA) was concluded between the parties which was approved by a decree of the Ministry of Infrastructure and Mobility and a decision of an Inter-ministerial Committee. This agreement concluded the proceedings initiated against ASPI and confirmed ASPI’s proposal by which it committed (i) to pay EUR 3 400 million in compensation, (ii) strengthen the safety standards of the conceded motorway network and (iii) transfer control of ASPI to the Cassa Depositi e Prestiti SpA and to investors that were accepted by this corporation.
In the national proceedings Adusbef asked the national court to annul the decree and the decision which supported the SA. As the national court noticed that the contracting authority, when accepting the agreement, did not formally examine compliance with Directive 2014/23/EU, and as it was unsure about the exact meaning and scope of the Directive when it comes to the modification of concession contracts, it referred three preliminary questions to the Court of Justice. It should be noted that Directive 2014/23/EU was applicable due to the Court’s long standing case law that EU legislation which is in force at the date of the modification should be the basis of the assessment.
2. Article 43 Directive 2014/24/EU
The first question concerned whether Directive 2014/23/EU must be interpreted as precluding national legislation under which a contracting authority may modify a concession during its term, without organising a new concession award procedure and without providing reasons for not organising such a procedure. The modification of contracts during their term is governed by Article 43 of the Directive, which sets out in paragraphs 1 and 2 an exhaustive list of circumstances that allow for modification without the organisation of a new award procedure. The above-mentioned clauses (i), (ii) and (iii) in the SA modified the motorway concession awarded to ASPI without a new concession award procedure. It should hence be tested whether these clauses correspond to one of the circumstances listed in Article 43(1) or (2). As this is a factual exercise, the Court left this assessment to the national court, while nevertheless providing more clarity by interpreting these provisions.
2.1. Unforeseeable Circumstances
As stipulated by point (c), a concession can be modified without a new award procedure in cases where the need for modification has been brought about by circumstances which a diligent contracting authority could not foresee, the modification does not change the overall nature of the concession, and the increase in value is in principle not higher than 50 % of the value of the initial concession. The national court wondered particularly whether the modification of the motorway concession could have been foreseeable where the concessionaire has committed a serious failure to fulfil its obligations to maintain the network. Interestingly, the SA did not include any formal finding that ASPI had failed to fulfil its obligations. The Court of Justice replied that it is for the national court to assess whether there is such a failure and whether there is a causal relationship between that failure and the modification made to the concession during its term. Obviously this included that the national court should assess whether the concessionaire’s failure was an unforeseeable circumstance for the contracting authority. Without much explanation, the Court concluded in paragraph 64, first sentence, that a concessionaire’s failure to fulfil contractual obligations cannot, per se, be regarded as a circumstance which a diligent contracting authority could not foresee. This makes sense as a diligent contracting authority should collect information regarding the maintenance of its roads (frequency, time slots, seriousness, magnitude, urgency, etc.), especially as it has a public interest obligation. In addition, improper maintenance can at times even be determined visibly and contracts may include clauses regarding controls by the awarding authority. In any case, the Court held in paragraph 64, second sentence, that a concessionaire’s failure to fulfil its contractual obligations is not liable to justify the modification of a concession during its term without a new procedure. It can be questioned whether the first and second sentence of paragraph 64 fully align with each other as the words ‘per se’ in the first sentence seem to leave some room for manoeuvre, seemingly suggesting that a failure to fulfil contractual obligations cannot by or in itself lead to an unforeseen circumstance. The question can be asked whether this could mean that if this failure could not reasonably have been established or detected by a diligent contracting authority, modification would still be allowed. The second sentence of paragraph 64 does not seem to leave any room for such interpretation. This leads to the conclusion that the modifications listed above under (i), (ii) and (iii) cannot be justified on the basis of Article 43(1)(c) of Directive 2014/24/EU.
2.2. Succession
On the basis of point (d)(ii) of Article 43(1), modification without opening competition is allowed where a new concessionaire replaces the one to which the contracting authority had initially awarded the concession as a consequence of ‘universal or partial succession in the position of the initial concessionaire, …, of another economic operator that fulfils the criteria for qualitative selection initially established …’. On the basis of the SA, ASPI transferred control, together with Mundys SpA, its parent company, of ASPI to Cassa Depositi e Prestiti SpA and some of the latter’s investors. More concretely, Mundys sold 88% of ASPI’s capital to a holding company of which Cassa Depositi e Prestiti Equity was the majority shareholder. It this regard it should be questioned firstly whether this transfer of shares falls under point (d)(ii) and secondly, if this is not the case, whether it should nevertheless be considered as a modification to the initial concession contract. The Court noted that transfer of the concessionaire’s shares does not result in the replacement of the original concessionaire by a new concessionaire, but merely in modifications to the composition or distribution of the shares. While the Court held that Article 43(5) stipulates that modifications which do not fall under Article 43(1) or (2) require a new award procedure, it also concluded that modifications affecting the concessionaire’s shares (which do not fall under Article 43(1)(d)(ii) and which do not alter the concession for the purposes of Article 43(5)) do not require the organisation of a new award procedure. As the Court did not explicitly refer to Article 43(1)(e) in this regard, which allows for modifications which are not substantial, it can be questioned whether the change in the composition of the shareholders is considered to be a modification, although an unsubstantial one, or whether it is not even considered to be a modification in the first place. In any case a change in the composition of the shareholders of an economic operator does not necessarily entail that this economic operator (partially) ceases to exist or is suddenly succeeded in the concession contract by the majority shareholder. The ‘old’ concessionaire can continue to exist, with a different composition as to the shareholders, next to another company that can be the main shareholder. As held in Assitur (Case C-538/07), a mere finding of a relationship of control between the undertakings concerned, by reason of ownership or the number of voting rights exercisable at ordinary shareholders’ meetings, is not sufficient for the contracting authority to automatically exclude them as separate undertakings. Moreover, even if the initial concessionaire ceases to exist and is succeeded, e.g. due to acquisition or insolvency, this does not require a new concession procedure as long as the criteria of Article 43(1)(d)(ii) are fulfilled, one being that the new concessionaire fulfils the criteria for qualitative selection initially established.
2.3.
Non-Substantial Modifications
With regard to modifications which are not substantial (point (e)), the Court held that it is for the national court to assess the substantiality of the modification. On the basis of Article 43(4) modifications are substantial if the modification changes the economic balance of the concession in favour of the concessionaire in a manner which was not provided for in the initial documents. The payment made by ASPI and the strengthening of the safety standards do not in any case change the economic balance in its favour.
3. Duty to State Reasons
From a procedural point of view, the Court noted that Directive 2014/23/EU only contains a duty to publish a modification notice after a modification when it comes to the modifications listed in points (b) and (c). That being said, the general principle of sound administration, from which the obligation to state reasons flows, requires national authorities to state reasons for their decisions at all times. so that This obligation must allow any interested party to determine why a new concession procedure was not organised. The Court hence concluded that Article 43 of the Directive should be interpreted as not precluding national legislation under which a contracting authority may modify a concession during its term without organising a new concession award procedure, provided that that modification does not fall under Article 43(5) and that the contracting authority has set out the reasons why it considered that it was not required to organise such a procedure.
4. Reliability Test
With its second question the national court wondered whether Directive 2014/23/EU must be interpreted as precluding national legislation which allows the modification of a concession during its term without an obligation to assess the reliability of a concessionaire, where that concessionaire has committed a serious failure to fulfil its obligation or is suspected to have done so. The Court rightly distinguished between a modification that requires a new contract award procedure, for which the selection and qualitative assessment criteria included in Article 38 have to be checked, and modifications that are allowed without a new procedure on the basis of Article 43. This Article only establishes an obligation to verify the reliability of the concessionaire in point (d)(ii) of paragraph 1. As already discusses in part 2.2, it does not seem that point (d)(ii) is applicable in the case at hand. While, in the absence of any harmonisation at EU level, it is for each Member State to determine how contracting authorities can react when a concessionaire has committed a serious failure which calls into question its reliability, Article 43 must hence be interpreted as not precluding national legislation under which the contracting authority is entitled to modify a concession without having assessed the reliability of the concessionaire, where that modification is not caught by point (d)(ii) or Article 43(5). The fact that EU law does not forbid national authorities from verifying the reliability of concessionaires in case of serious failures during the execution of the contract, stretches the possibility of Article 38(8) paragraph 2 in time. While contracting authorities may exclude an economic operator at any time during the procedure where it turns out that an economic operator is caught by a discretionary exclusion ground, this timeslot can be extended to the contract execution phase as well.
5. Contract Termination
Finally, the third question concerned whether EU law imposes an obligation to terminate a concession in the case of an infringement of the principle of public procurement and/or in the case of the establishment of the unreliability of the concession holder. This question concerned the interpretation of Article 44 of the Directive on the termination of concessions. The Court of Justice held that since Adusbef only instituted an action for annulment against the decree and decision which approved the settlement agreement, the case does not concern the potential termination of the motorway concession. This was the main reason to declare this question inadmissible.
That being said, Article 44 merely contains an obligation for Member States to ensure that contracting authorities have the possibility to terminate a concession when a modification has taken place which would have required a new award procedure. Termination is hence not mandatory from an EU law perspective.
6. Conclusion
The modification of contracts during their term remains an interesting topic. In Adusbef, for the first time, the link between contract modification and an (alleged) serious failure to fulfil the concession obligations was at stake. Whether such failure is foreseeable for a diligent contracting authority may be difficult to assess, but seems to be crucial to allow for contract modification. In any case, modifications affecting the concessionaire’s shares are not caught by Article 43. It can be wondered whether this is because these are considered to be not substantial, or not to be covered by the concept of ‘modifications’ in the first place.
It is clear that even though the Concessions Directive dates back to 2014, its provisions have not yet revealed all their secrets!
Sarah Schoenmaekers is an Endowed Professor of EU law at Open Universiteit, Associate Professor of EU law at Maastricht University and Professor of Construction law at Hasselt University
Schoenmaekers, S.; “Modifications of Concession Contracts to correct for Negligence? No Way! Consider the Past, take care of the Present and foresee the Future! (Case C-683/22)”, EU Law Live, 28/11/2024, https://eulawlive.com/op-ed-modifications-of-concession-contracts-to-correct-for-negligence-noway-consider-the-past-take-care-of-the-present-and-foresee-the-future-case-c-683-22/
Organic Flaw: the CJEU wrestles with a drafting Error in different Language Versions
Elijah Granet
In EU law, a score of 21–3 counts as a tie, at least when it comes to divergent language texts. When the EU legislature enacted Regulation 2018/848, defining what counts as an organic products, it sought a high degree of animal welfare and sustainability. The Commission, in implementing this regulation (Commission Implementing Regulation 2021/1165), specified that, while manure of farmyard origin (otherwise excluded from organic production) could be used provided it did not derive from the rear-ends of animals raised by ‘factory farming’ (undefined). Or, rather, the Commission specified this except for the Danish, Dutch, and Portuguese readers, who were told the manure couldn’t come from ‘landless livestock production’ (also undefined). Consequently, in Case C-228/23 Association AFAÏA v INAO, the Court of Justice had to wrestle with finding an interpretation that respected the equal authenticity of both texts.
The case began with a decision by the INAO, a French public body overseeing organic labelling, that the Implementing Regulation’s use of ‘factory farming’ meant that livestock raised in integrated slatted systems and exceeding the limits set in the Environmental Impact Assessment Directive (Directive 2011/92) (e.g., 900 places for sows). INAO based their new interpretation on ‘factory farming’, which replaced (in French) the previous language of ‘landless agriculture’. INAO viewed ‘factory farming’ as generally prohibiting the ‘mechanisation of processes and mass production’ (para. 19). (The INAO’s decision was based on since-repealed older legislation, but the relevant language is identical to the current law) AFAÏA, a trade association for sellers of organic fertilisers disagreed, pointing to the fact that the three dissenting texts used ‘landless agriculture’ (a more specific term), and thus there was no change to the Commission’s approach to implementing the wishes of the EU legislature. The French Conseil d’État, stuck between two texts, made a reference to the Court of Justice.
The Court recited the usual string of platitudes (paras. 38–9). EU law is an autonomous legal order which needs to be uniformly interpreted across the Union. All language versions are equally authentic. If the different texts led to unharmonious national readings, all manner of bad things might happen.
Trite law is easy to recite. Applying it is another matter. The terms are not clearly defined, so the Court fell back on ordinary meaning. ‘Factory’ implies an industrial, high density, and artificial conditions ‘aimed at maximising production’ (para. 44). Concurring with AG Campos Sánchez-Bordona, the Court concluded, extrapolating from its own definition, that this necessitated the use of antibiotics, enriched foods, disregarded animal welfare, and risked pollution. Applying the same ordinary meaning and extrapolation methods, as well as the use of the term elsewhere in EU law, the Court defined ‘landless livestock production’ as a sub-type of factory farming by which the food given to the livestock is not grown in the same agricultural holding as the livestock. Thus, the two could not be harmonised.
The Court then relied on a teleological approach to strengthen its conclusion. The provisions allowing farmyard manure are derogation clauses, since the manure would otherwise be inadmissible in organic farming. Thus, a strict interpretation was necessary; this supported the reading that the Implementing Regulation prohibited both factory farming and landless production. Examining the recitals of the Regulation in question, the Court characterised organic farming as a method of ethical production that was meant to encompass not only a desire for sustainable land management but more generally of animal welfare and environmental protection. The Court also cited its own case law to show the importance the EU legislature put on animal welfare in organic labelling.
On this basis, the Court decided the ‘factory farming’, which includes ‘landless livestock production’ was prohibited by the second annex. In considering the specific facts of the case–the prohibition of the use of integral slatted systems and exceeding density limits, the Court further (para. 70 et seq.) found the French measures not to be precluded by the directive. However, the considerations INAO specified could be used only as indicia and must be part of an overall assessment of the entire farming operation.
The outcome here is not surprising, given the Court’s case law repeatedly emphasising animal welfare as a paramount consideration of EU agricultural law generally and organic classifications in particular. The unusual element of this case is the language clash. While divergent translations do recur periodically, it is striking that this case involves divergent rules in an important economic sector which simply went unnoticed for a decade, and were apparently a drafting error rather than a linguistic one.
The voluminous nature of EU law, combined with the fact that very few people read it in more than three languages, means that, under the grand talk of harmony, there may be a number of other instances in existing, longstanding legislation where the internal market is hurt by small divergence in an annex somewhere producing anti-competitive effects.
These may go completely unnoticed until a clever lawyer takes the time to find the divergence. In this case, we can be grateful to the dedication of the lawyers in the French proceedings who actually examined the other language versions. The practice lesson for EU lawyers is clear. Always check all the versions you can read and hunt down a colleague for the versions you cannot read. Most of the time, this may reveal nothing, but as this case shows, sometimes you might be the first to spot the discrepancy and use it to the profit of your client.
Elijah Granet is a law postgraduate student at the University of Southern California.
Granet, E.; “Organic Flaw: the CJEU wrestles with a drafting Error in different Language Versions”, EU Law Live, 26/11/2024, https://eulawlive.com/ analysis-organic-flaw-the-cjeu-wrestles-with-a-drafting-error-in-different-language-versions-by-elijah-granet/
SYMPOSIUM
COMPETITION CORNER:
ARTICLE 102 EXCLUSIONARY GUIDELINES: CODIFICATION OR RESTATEMENT?
Relative Efficiency to the Rescue of the Draft Guidelines on Exclusionary Abuses
Pablo Solano Díaz
Article 102 of the Treaty on the Functioning of the European Union (TFEU) exemplifies the existential crisis facing competition law regarding its purpose, particularly whether it should pursue non-market objectives such as fairness, sustainability, or the democratic functioning of society. Consequently, there is a pressing need to provide a coherent explanation of the seemingly erratic doctrine and jurisprudence on Article 102 TFEU and to distil these into a redefinition of such provision. This redefinition should be grounded in economic and comparative reflections on its objectives, enabling the development of a legally and economically robust analytical framework for its future application. Such a framework should address both exclusionary and exploitative abuses and align Article 102 TFEU with the prohibition of agreements and concerted practices under Article 101 TFEU, as well as with the logic of merger control. It also necessitates distinguishing Article 102 TFEU from adjacent regulation, notably Regulation 2022/1925 on contestable and fair markets in the digital sector (the Digital Markets Act).
The starting point for this redefinition of Article 102 TFEU is the dominant legal and economic doctrine in Europe and the United States (Iacovides and Stylianou, 2022, pp. 625–626; Hovenkamp, 2023), which posits that competition authority interventions must be justified by market failure—specifically, a suboptimal outcome in terms of (total) welfare caused by a lack of (allocative) efficiency. Within this context, the market failure consisting of excessive market power justifies applying Article 102 TFEU after such failure has materialised—through the sanctioning of exclusionary or exploitative abuse—or merger control rules to prevent it ex ante. The economic concept of market failure can be translated into the legal concept of restriction—the common legal content of Articles 101 and 102 TFEU—through the notion of a dominant company’s ‘special responsibility’ not to further weaken the market structure beyond what dominance already (lawfully) weakens it.
Under Article 101 TFEU the ‘concurrence of wills’ appears to inherently signal artificiality because it undermines the competitive uncertainty facing companies on normal market conditions (C-2/01 P and C-3/01 P Bayer, para 97; C-8/08 T-Mobile, para 61). Conversely, unilateral conduct relevant to Article 102 TFEU does not inherently imply artificiality because unilaterally competing for economic rents is natural and can even be desirable ( Tirole, 1988, pp. 76–78). Therefore, in the context of abuse of dominance, a workable criterion of artificiality needs to be defined to distinguish a dominant company’s legitimate efforts to foster its commercial interests (C-468/06 to C-478/06 Lelos kai Sia, para 69) from breaches of its special responsibility. Assuming that intervention by competition authorities would only be justified to the extent necessary to address market failure equated to restriction, this criterion must distinguish conduct that by its nature or effects leads to market failure from conduct that the market can correct by itself. The concept of relative efficiency provides such a workable criterion for determining artificiality.
As discussed above, the relative efficiency criterion is inspired by the dominant doctrinal paradigm that views competition law as safeguarding (total) welfare. However, it is also aligned with both the traditional view of competition law as a guarantor of a competitive market structure and the main alternative theory that values the competitive process as an end in itself leading to the natural selection of operators offering superior price, quality, innovation, or choice (Albæk, 2013, pp. 70–75). Indeed, the relative efficiency criterion ensures the protection of only those competitors at least as efficient as the dominant firm that can discipline its behaviour, while allowing for the exit of less efficient competitors—a result beneficial to both welfare and the competitive process (C-48/22 P Google Shopping, para 164). For that matter, under the presumption of innocence, there cannot be causation in law (rather than in fact—Scordato, 2022) between the foreclosure of less efficient competitors and the dominant company’s conduct; such foreclosure must instead be attributed to less efficient competitor’s inefficiency (Ibáñez Colomo, 2023, pp. 399–402). Nonetheless, competitive pressure from less efficient competitors may still be considered within ‘all the relevant factual circumstances’, for instance, to rebut the capability of foreclosure (C413/14 P Intel, paras 138–141; C-240/22 P Intel RENV, paras 179–180), thereby integrating the structuralist perspective (Solano Díaz, 2024a).
Thus, the relative efficiency criterion strikes the right balance between dominant companies’ economic freedom and incentives and the public interest in maintaining a market-based metric—whether welfare, competitive process, or competitive market structure (Advocate General Jacobs’ Opinion in C-7/97 Oscar Bronner, paras 56–58 and 62–64; Advocate General Saugmandsgaard Øe’s Opinion in C-152/19 P and C-165/19 P Deutsche Telekom AG and Slovak Telekom, paras 66–79). Conduct by a dominant company is deemed artificial—and therefore leads to market failure, competitive process distortion or market structure weakening—if its objective logic is to foreclose equally efficient competitors capable of imposing a sufficient competitive constraint on the dominant company that forces it to behave efficiently. References to equally efficient competitors include both equally or more efficient competitors and those which, absent exclusionary conduct, could achieve the necessary scale to become equally or more efficient and thus impose such a competitive constraint (C-48/22 P Google Shopping, para 165). In these cases, competition authorities should limit themselves to focus on preventing the artificial foreclosure of equally efficient competitors through an exclusionary abuse case. This is the least interventionist and therefore the preferable method of avoiding market failure, or restoring the competitive process or the competitive market structure (Gual et al., 2006, pp. 10–11).
If no equally efficient competitors can compel the dominant company to behave efficiently, competition authorities may act as substitutes by directly influencing the dominant company’s market decisions to enforce a market outcome equivalent to the one that equally efficient competitors would have imposed—for instance, by prohibiting certain price levels or requiring the dominant company to offer specific conditions or innovations. In other words, when no equally efficient competitors are able to force the dominant company to behave efficiently, its special responsibility renders exploitative conduct artificial just because it is deemed unfair and not necessary and proportionate to achieving a legitimate objective. To establish such unfairness, competition authorities must verify the causal link between dominance and restriction just like in exclusionary abuses, with the difference that in exploitative abuses they must determine a direct harm on competition (Padilla, 2024a, p. 23)—on welfare,
competitive process or competitive structure. This direct harm is identified by checking—for instance, but not only, through benchmarking against other (competitive) markets and operators—whether the dominant company, due to its dominance, is gaining a (significant and persistent) advantage through its exploitative conduct that it could not have gained in the presence of a sufficient constraint from equally efficient competitors, and that is thus artificial. This applies regardless of whether the dominant company could have engaged in the same conduct in the presence of a sufficient constraint from equally efficient competitors or even without being dominant. Only in these cases of unjustified unfairness would enforcement be justified by a market failure that cannot be self-corrected—or by an overly weak competitive market structure or process, depending on the underlying philosophical perspective.
This rationale aligns with the ex-ante logic of merger control, where the single legal test—‘significant impediment to effective competition’—is satisfied either by an exclusionary theory of harm, where the resulting entity would have the ability and incentives to foreclose equally efficient competitors, or by an exploitative theory of harm, where the competitive pressure from equally efficient competitors would not be enough to prevent the resulting entity from offering inferior prices, quality, innovation, or choice. Being compatible with the structuralist construction of restriction, the relative efficiency criterion also aligns the analytical frameworks of Article 101 TFEU and Article 102 TFEU. For agreements and concerted practices under Article 101 TFEU, competition authorities must examine the nature of the practice—its objective aims in light of the content and context, akin to the concept of object (C-176/19 P Servier, paras 107–108; C-151/19 P KRKA, paras 74–75; C-298/22 Banco BPN/BIC Português, paras 52–56)—or its effects. These two alternative factors determine whether the plausible objective logic of the practice is to negatively affect competition parameters (to the detriment of welfare, the competitive process, or the competitive market structure).
Equally, establishing an abuse under Article 102 TFEU requires determining the plausible objective logic of the dominant company’s conduct based on its nature (departure from competition on the merits) and its effects (capability of foreclosure). However, unlike under Article 101 TFEU, these are not mutually exclusive methods of objectifying the causal link between the practice and the restriction (Castillo de la Torre and Gippini Fournier, 2024, para 1.055). For Article 102 TFEU, both nature and effects must cumulatively be demonstrated, except in the case of a refusal to deal which is deemed prima facie legitimate in light of its content and context and which is thus subject to full effects-based analysis under the essential facilities doctrine (Opinion in C-233/23 Android Auto, paras 45–46; C-48/22 P Google Shopping, paras 100–111). The relative efficiency criterion determines the degree to which each of those factors needs to be proven. This is not about presumption or burden reversal (C-240/22 P Intel RENV, paras 328–332), but about the quality of evidence needed to meet the single standard (plausibility subject to rebuttal), as in merger control (C-376/20 P CK Telecoms, paras 63–89). Consequently, the relative efficiency criterion underpins a unified analytical framework for the application of Article 102 TFEU that reconciles seemingly disparate legal tests and standards in the case law on exclusionary abuses.
Recent case law confirms that the legal test for exclusionary abuse of dominance involves those two cumulative elements (nature and effects) interwoven into a single test of potential anticompetitive effects (Opinion in C-377/20
SEN, para 48): both artificiality of the conduct (departure from competition on the merits—anticompetitive nature) and capability of foreclosure (potential anticompetitive effect)—C-307/18 Generics, paras 152–154— need to be proven by checking whether equally efficient competitors can match or offset the advantage that the dominant company gains from it conduct (Padilla, 2024b, p. 4). Thus, a single test and standard can be defined: competition authorities are required to demonstrate the plausibility [standard of proof] that the objective logic (objective aims based on the content and context, or all the relevant factual circumstances as per C-240/22 P Intel RENV, para 179) of the dominant company’s conduct is to derive an advantage that equally efficient competitors, merely because they are not dominant, (i) cannot match by engaging in the same conduct [competition on the merits component of the test]; and (ii) cannot offset through other means to avoid potential foreclosure [potential foreclosure effect component of the test] (Solano Díaz, 2024b, pp. 560–563).
This approach offers significant advantages, as outlined elsewhere (Solano Díaz, 2024b, pp. 563–572). Among them, it addresses concerns that a standard of proof based on plausibility might constitute an unjustified reversal of the burden of proof. Far from creating a presumption favouring competition authorities, it merely establishes the intensity of proof required to meet the single standard to establish an abuse. In cases where a cursory Article 101-like analysis of content and context (or all the relevant factual circumstances) makes the departure from competition on the merits or the capability of foreclosure clear, a detailed effects analysis (e.g., based on the asefficient competitor test or counterfactual assessment) is unnecessary. In such cases, it is more expedient to leave it for the defendant dominant company to provide an alternative explanation, such as disproving the capability of foreclosure, or the artificiality by presenting an objective justification or efficiencies (C-413/14 P Intel, paras 138–141). This strikes a fair enforcement balance by requiring the dominant company to build only one alternative assessment, which competition authorities must analyse in detail, while avoiding the need for authorities to consider virtually unlimited scenarios, which may prove ‘an arbitrary or even impossible exercise’ (C-48/22 P Google Shopping, paras 226–232).
Viewed through this lens, all exclusionary abuses are subject to a unified test (equally efficient competitors’ matching or offsetting dominant company’s advantage) and standard of proof (plausibility subject to rebuttal), differing only in their factual circumstances (content and context in Article 101 TFEU terminology). These factual variations dictate the quality of evidence needed to establish the restrictive logic (objective aims in Article 101 TFEU terminology) of the conduct based on its nature and effects. Therefore, all abuses can be placed on a continuum, enabling both per se rules (where effects analysis is cursory) and the more economic approach (requiring detailed effects analysis) to coexist, depending on how clearly the factual circumstances show that equally efficient competitors cannot match or offset the advantage derived by the dominant company and, therefore, that this is the plausible objective logic of the conduct. This continuum also allows for the various tests in case law (e.g., predatory pricing, exclusivity payments, tying and bundling of sales, margin squeeze) to be rearranged in a quadrant according to whether the first component of the test (artificial conduct deviating from competition on the merits), the second component (potential foreclosure effect), both, or neither, can be assumed as plausible (Solano Díaz, 2024b, pp. 582–591).
Against this background, the Commission’s Draft Guidelines on the application of Article 102 TFEU to abusive exclusionary conduct by dominant companies can be strengthened with minor adjustments respecting their enforcement policy approach (detailed in Solano Díaz, 2024c). The first suggestions are making reference to the possibility of building an exploitative abuse where no equally efficient competitors can impose a sufficient constraint on the dominant company (footnote 17) and incorporating the relative efficiency criterion as the benchmark for assessing departure from competition on the merits and capability of foreclosure throughout the text (paras 14, 55, 57, 62, 74). This adjustment would also necessitate clearer references to prima facie legitimate refusals to deal (in light of their content and context) being subject to the essential facilities doctrine (paras 44, 96, 163), the condition for a new product being a further guarantee of a prevalent general interest in competition in cases where only a hypothetical market for the input can be identified (para 106), and situations where refusals to deal are not prima facie legitimate (para 166). Additionally, it should be clarified that less efficient competitors should be considered only within the context of all the relevant circumstances (paras 65, 73), while only relative efficiency should serve to establish a causal link between dominance and potential exclusionary effects in both its facets: deviation from competition on the merits and capability of foreclosure (para 74).
The legal standard should also be defined as plausibility subject to rebuttal (paras 54, 59, 61, 67, 68). This would allow the Commission the achieve the desired level of enforcement expediency while addressing criticisms of onus reversals by replacing problematic references to ‘presumptions’ (paras 60(b), 82, 95, 111(a), 112, 128, 168) with ‘assumptions’ grounded in plausibility. Additionally, sections addressing specific legal tests should clarify when the factual circumstances underlying each of them justify plausible assumptions regarding deviations from competition on the merits, capability of foreclosure, both, or neither. For example, in cases of exclusive dealing, tying, below-variable-cost pricing, and margin squeeze, it should be specified that the relevant factual circumstances confirm the plausibility that equally efficient competitors cannot replicate or offset the advantage derived by the dominant company from those practices (paras 82, 89, 111(a), 128). Finally, objective justification should require the dominant company to demonstrate the plausibility of an alternative explanation other than gaining an advantage that equally efficient competitors cannot replicate or offset, which requires softening the strict proportionality condition (paras 167, 168).
Pablo Solano Díaz is an adjunct lecturer in EU and competition law at several Spanish universities, a PhD candidate at the Universidad Autónoma de Madrid, and an antitrust and regulatory counsel in the technology sector. He also holds an LLM in Law and Economics from the College of Europe. All opinions expressed are those of the author and do not reflect the positions of any associated institutions.
Solano Díaz, P.; “Relative Efficiency to the Rescue of the Draft Guidelines on Exclusionary Abuses”, EU Law Live, 25/11/2024, https://eulawlive.com/ competition-corner/relative-efficiency-to-the-rescue-of-the-draft-guidelines-on-exclusionary-abuses-by-pablo-solano-diaz/
THE LONG READ
A Modest Proposal for an EU Regulation on Football: Governance If
not the EU, then who?
Jan Exner & Stephen Weatherill 1
Introduction: Building Momentum
Football has generated much critical media coverage in recent years. Think of the maltreatment of fans at major events, outrage over ticket prices and randomly re-scheduled kick-off times, and the increasingly bloated size and length of major competitions. Think also of the environmental damage caused by the international carousel and the ready association with sources of funding that have only a loose connection to respect for human rights. Think too of the exposure of the occasional corruption scandal. Some of these are matters of reputational damage, and some have spilt over into litigation. But all have the same problem as their root cause. All are the product of how the sport is run primarily for and by the powerful, with scant regard for all affected parties, most conspicuously athletes and fans. The problem is inadequately representative and accountable governance.
Three years have passed since the appeal was made that only the EU can save football from itself,2 yet momentum is now building. A conference organised by the Union of European Clubs in Brussels on 15 October tabled several ideas for reform, including the need for closer attention by the EU to mandating improvement in governance practices.3 October 2024 also saw the publication of a FairSquare Policy Brief authored by Jan Zglinski under the suggestive title Laws for the Games: How the EU can reform sports governance. 4 It is rich in prescriptive ambition. Finally, FairSquare published a report on 30 October 2024 identifying serious structural flaws within FIFA, offering the EU as a possible solution for external reform of football.5
We want to add to the momentum. In this Long-Read, we explain where and why football fails to deliver representative and accountable governance and why the EU is the only plausible reform source. Then, we set out a concrete agenda of matters that the EU can and should address to reform the key structures and patterns
1. Jan Exner is an academic visitor at the Institute of European and Comparative Law at the Faculty of Law of the University of Oxford and Somerville College and an assistant professor at the Faculty of Law of Charles University in Prague, exnerj@prf.cuni.cz.
Stephen Weatherill is a Professor Emeritus at the University of Oxford and a senior research fellow at Somerville College. He has (co) authored several publications calling for EU legislation on sports governance: Joseph Weiler and others, ‘Only the EU Can Save Football from Itself | View’, Euronews, 12 November 2021; Stephen Weatherill, ‘Saving Football from Itself: Why and How to Re-Make EU Sports Law’, Cambridge Yearbook of European Legal Studies 1, 2022; Stephen Weatherill, ‘The EU as a Sports Regulator’, Handbook on International Sports Law, Edward Elgar Publishing, 2022, stephen.weatherill@some.ox.ac.uk
2. Weiler and others (n 2).
3. ‘European Professional Football Forum Highlights the Urgent Need for Reforms’ (Union of European Clubs).
4. Jan Zglinski and FairSquare, ‘Laws for The Games: How the EU Can Reform Sports Governance’, 2024.
5. FairSquare, ‘Substitute: FIFA Not Fit to Govern World Football, External Reform Essential to Prevent Future Harm’, 2024.
of governance. We call for EU legislative action to enhance football governance, a necessary step to ensure the sport’s fairer, more transparent, and accountable management. Additionally, the EU could also consider legislation protecting the European sports model. We insist that football needs and deserves concrete, politically driven reform rather than relying solely on the status quo or sporadic legal challenges.
The Nature of the Problem: Poor Governance in Football
Consider the recent controversy caused by FIFA’s expansion of its Club World Cup. In 2023, following a model initiated in 2005, this competition comprised seven matches played across ten days during the northern hemisphere’s winter. Manchester City won the trophy after playing just two matches. The 2025 edition will be very different. A total of 63 games and seven matches are required to win the trophy, a competition stretching across a full month in the heat of summer. It is not FIFA alone which eagerly inflates the calendar. Season 2024/25 sees the UEFA Champions League expanded beyond its previous shape, with each qualifying team playing eight rather than six matches during a group stage. Having previously concluded before Christmas, the group stage now spills over into January.
These developments have triggered an explosion of concern about how football governing bodies make decisions. Where is the players’ voice, whose workload is significantly increased and whose opportunity for rest is significantly decreased? What of smaller clubs, especially (but not only) in smaller countries, increasingly cut adrift from the top table as competitions have become increasingly loaded in favour of the interests of the biggest clubs in the biggest countries? And does anyone ask the fans what they want?
The EU is not blind to such problems. The Council and the European Parliament have increasingly recognised unequal representation of all stakeholders. On top of that, the EU political institutions have noted gender inequality, corruption, match-fixing, doping, racism, financial instability, digital piracy, and the dominance of profit-driven models. They have also highlighted concerns about human rights violations, discrimination, violence, environmental impacts, and sustainability. Consequently, the EU institutions have repeatedly called for improved sports governance, a prerequisite for sporting governing bodies’ right to autonomy and self-regulation in the EU.6 However, they have not yet taken any legislative action. Therefore, the only legally binding intervention undertaken by the EU has been driven by litigation, which has limits as a source of reform, explained in the next subsection.
The Limitations of Litigation
We do not underestimate the impact of reform driven by litigation. The famous Bosman ruling from 19957 engineered an adjustment of the transfer system to the benefit of players, and it required the abolition of intra-
6. ‘Conclusions of the Council and of the Representatives of the Governments of the Member States Meeting within the Council on Combating Corruption in Sport’; ‘European Parliament Resolution of 23 November 2021 on EU Sports Policy: Assessment and Possible Ways Forward’; ‘Resolution of the Council and of the Representatives of the Governments of the Member States Meeting within the Council on the Key Features of a European Sport Model’.
7. Judgment of the Court of Justice of 15 December 1995, Bosman (C-415/93, EU:C:1995:463).
EU nationality-based discrimination in club football. The Court of Justice’s European Superleague Company ruling of 21 December 20238 demands that procedures to approve new competitions be transparent, objective, nondiscriminatory and proportionate. And the Diarra case, decided by the Court of Justice on 4 October 2024,9 will cause a further jolt to the football’s transfer system. It has already provoked FIFA to promise ‘a global dialogue with key stakeholders (…) in compliance with European law’.10 On top of that, litigation concerning matters such as FIFA’s regulation of agents is pending before the Court of Justice.11 Finally, FIFA’s control over the international calendar, which allows it to find room for its enlarged Club World Cup, has been challenged under competition law before the European Commission.12 This is fine – as far as it goes.
However, litigation can never be more than a marginal disruptive element in the quest to achieve a systematic improvement in governance. Litigation is ad hoc – a case here, a case there, arising according to the accidents of litigation. It does not necessarily target the most deep-rooted problems. Litigation is reactive – it responds to problems that have already arisen and caused harm. It does not establish predictable ground rules understood in advance. In any event, competition law – which is, by a distance, the most commonly employed set of rules in litigation concerning the governance of sport – is not designed to capture the sport’s peculiar economic and cultural features. A much higher level of coordination is required among participants in a sports league than in a conventional economic sector. Clubs need each other.
Moreover, due to the need to establish institutional means to achieve that necessary coordination, sports are typically organised top-down according to the pyramid structure. Governing bodies are responsible for setting the game’s rules and ensuring they apply uniformly across the globe in a way not found in normal industries. Competition law is not blind to these features. It is applied with sensitivity to the context, although there is, for sure, room for legitimate discussion about how successful competition law has been in accommodating the peculiarities of sport.13 The anxiety, however, is that smoothing the prevailing frictions requires much more than the application of competition law and that, therefore, litigation, even if it happens to be pursued, addresses only part of the problem.
8. Judgment of the Court of Justice of 21 December 2023, European Superleague Company (C-333/21, EU:C:2023:1011).
9. Judgment of the Court of Justice of 4 October 2024, FIFA (C-650/22, EU:C:2024:824).
10. ‘FIFA to Open Global Dialogue on Article 17 of the Regulations on the Status and Transfer of Players Following Diarra Ruling’, FIFA, 14 October 2024.
11. Court of Justice, RRC Sports (C-609/23).
12. ‘European Leagues and FIFPRO Europe to File Joint Complaint to European Commission against FIFA Regarding International Match Calendar’ FIFPRO, 23 July 2024.
13. Petros C Mavroidis and Damien Neven, ‘Legitimate objectives in antitrust analysis : The FIFA regulation of agents and the right to regulate football in Europe’, Revue Concurrences, 2024; Giorgio Monti, ‘EU Competition Law after the Grand Chamber’s December 2023 Sports Trilogy: European Super League, International Skating Union and Royal Antwerp FC’, Revista de Derecho Comunitario Europeo 11, 2024; Pablo Ibáñez Colomo, ‘Competition Law and Sports Governance: Disentangling a Complex Relationship’, 45 World Competition, 2022; Stephen Weatherill, ‘Protecting the Conditional Autonomy of Governing Bodies in Sport from Review “from a Competition Standpoint”: How the Court Should Decide Its Pending Cases on the Transfer System, the Regulation of Agents and Club (Re-)Location’, EU Law Analysis, 11 May 2024; Okeoghene Odudu, ‘No One Is Bigger than the Game’ in Jeremias Adams-Prassl and others (eds), The Internal Market Ideal: Essays in Honour of Stephen Weatherill, Oxford University Press, 2024.
Football governance is mired in a fundamental conflict of interest, whereby the game’s regulatory body also has a direct commercial stake in the choices made. This tension gets ever sharper as the sport becomes ever more commercially lucrative. Consider the expanded Club World Cup. Is it an admirable method to emphasise and develop the global nature of the game? Or is it a means for FIFA to increase its income? Quite probably, it is both. And FIFA’s decision may be lawful as a matter of EU law. The European Superleague Company judgment stands for the proposition that a governing body may act to protect the format of sporting competitions even where it has a direct commercial stake in them (though subject to procedural obligations of transparency and nondiscrimination, which were not met in the case).14
The Need for Governing Bodies – But also the Need for Legislation
The embedded problem is that sports are run according to an awkward bundling of regulatory and commercial functions, and litigation fails to address the root cause of the problem. Anxiety that the decision to expand the Club World Cup has occurred without adequate respect for all affected interests and instead emerges from within FIFA itself raises structural questions about how the sport is run. This goes beyond competition law. The CJEU is not a regulator that can create a fresh and representative framework. Litigation, though potentially an important motor of change in sport, cannot deliver a set of predictable, clear and systematic rules on good governance. Only legislation can do that.
It is a vain hope that governing bodies in sport will pursue vigorous reform from within. The problem is that they are self-interested and operate in a manner that denies a voice to all interests affected by their choices. There is an entrenched structural impediment to internal reform. So, reform needs to come from the outside. However, we doubt that the states can or should deliver reform. Political and/or legal factors explain why it is relatively uncommon for national public authorities to intervene in the operation of governing bodies in sports. They tend to respect their autonomy. And, in some respects, happily so. If national public authorities did regulate sports, they would inevitably do so in different ways, which would harm the uniformity of the sport’s global regulation. And there exists no public authority able to exercise global sports jurisdiction.
Football needs governing bodies. Football needs FIFA and UEFA. No public authority has the expertise or legitimacy to run football. Our aim is not to deprive governing bodies in sports of their primary role as autonomous regulators of their sport. Quite the reverse – we need a body to set common rules to secure the integrity of sporting competition and the global football game. We want governing bodies to champion sporting integrity, represent all affected interests, and promote equality, fairness and tolerance through sport. However, governing bodies are not currently living up to the entirety of this agenda. Most importantly, greater transparency and more representative and accountable governance are needed.
14. Judgment of the Court of Justice, European Superleague Company.
The EU as a Football Legislator
Football, a fundamentally cross-border activity, needs an independent source of regulatory reform, which is itself cross-border in aspiration and structure. There is only one place to look—the EU. The EU—and only the EU—is in a position to regulate football. Its legitimacy as a regulator with transitional reach is not in question. Its very purpose is to soothe the tensions inherent in transnational activity. And consider a point of brutal practicality: FIFA and UEFA can and do sanction member countries that they consider having pursued ‘political’ interference in the game by suspending teams from international competitions. In September 2024, UEFA cautioned the UK that its plans to implement legislation establishing an independent football regulator might be government interference and stressed its authority to exclude England from EURO 2028.15 The EU is immune to such threats. It has no team, and FIFA or UEFA cannot afford to expel all 27 member states’ teams from a tournament.
So, we want the EU to impose standards of good governance as a licence for the autonomy and self-regulation of football governing bodies. If it did so, its influence would doubtless be felt beyond the EU. Governing bodies are unlikely to be able to operate according to one set of rules for the EU and a quite different set elsewhere. So, in practice, this ‘Brussels effect’ causes the EU to become a de facto global regulator. Trends of this nature are already visible.16 It is not to be celebrated unconditionally. Anxiety about regulatory imperialism needs to be taken seriously, and in setting standards, the EU should be scrupulous to avoid any hint of Eurocentric bias. However, action by a transnational entity is needed: regulation by a single state will be ineffective in tackling a transnational problem. Anyone sceptical of the EU’s involvement must answer the question, ‘If not the EU, then who?’
We are not trying to bury FIFA and UEFA. We are trying to do the exact opposite. We propose that the EU rescue them – not replace them but reform them. We envisage a partnership – governing bodies make the rules, and the EU mandates principles that must be met to make those rules. We do not want to remove FIFA and UEFA’s autonomy but to enhance their standards of good governance, particularly in addressing the growing conflict between their regulatory and commercial roles. Put another way, our concern is with the process, not the outcome. We do not advocate that the EU shall assume ultimate regulatory authority for football in Europe (and de facto beyond) nor that it should tackle the organisational intricacies of competitions. Instead, we advocate that the EU should direct the processes through which such decisions are made to ensure they are transparent, fully representative, and accountable to all affected interests.
The aim is to improve how the governing bodies operate and reach their decisions and, in particular, to address the tension which has grown over recent years between regulatory and commercial functions. The ad hoc application of competition law can reliably deliver none of this. The EU can add value by making politically legitimate legislative
15. Dan Roan, ‘Uefa Warns England Could Be Banned from Euro 2028 over Regulator Concerns’, BBC Sport, 4 September 2024; Sean Ingle, ‘England Will Not Face Euros Expulsion for Having Regulator, Key Officials Say’, The Guardian, 15 September 2024.
16. Antoine Duval, Johan Lindholm and Alexander Krüger (eds), The European Roots of the Lex Sportiva: How Europe Rules Global Sport, vol Bloomsbury Open Access, Hart Publishing, 2024.
choices that improve the quality and predictability of football governance. The EU can usefully promote dialogue, the exchange of best practices, and institutional cooperation in the governance of sport. It can also move beyond competition law to regulation and adopt a policy of targeted legislative proactivity.
We focus on football. Football is by far the most popular and commercially significant sport in Europe, and its governance issues have been at the centre of recent controversies described above. A focused EU act could address the unique governance challenges in football, which are more complex due to its global reach and immense financial power. Moreover, football has already been the subject of numerous Court of Justice interventions and is the primary sport generating debates around competition law, transfer systems, and governance. A footballspecific act could build on this established legal foundation. We sincerely believe this is an opportunity, not a threat, for the governing bodies involved. Litigation driven by EU law is ad hoc and reactive, but it has landed heavy blows on sporting autonomy in recent years. Hierarchies in the traditional top-down ‘pyramid’ governance structure have been weakened, leading to the astutely judged question: ‘Who owns football?’17 EU legislation can target the specific governance challenges related to conflicts of interest within FIFA, UEFA, and national football federations.18 It can help governing bodies improve their game and restore reputations that have been tarnished in recent years.
The EU’s Competence to Legislate in Football
We believe that the EU has the competence to regulate football governance. However, it is not Article 165 TFEU on which we would wish to rely. That article, an innovation of the Lisbon Treaty and effective since 2009, provides the EU with the competence to support, coordinate, or supplement the actions of the member states in sport. While it allows for the adoption of incentive measures, it also excludes the harmonisation of national laws. So, it is not strong enough to support our proposal. We return to where it all started to find a suitable legislative basis for the EU’s action in the field. Since the 1970s, the Court of Justice has applied free movement law and later competition law to sports.19 Internal market law is the key to the EU’s competence in regulating football governance.
We believe that Articles 53(1), 62, and 114 TFEU are best suited for EU legislative action. They empower the EU to harmonise laws to enhance its internal market. The power of football governing bodies extends beyond sport into the economic market. The threshold for claiming this EU legislative competence is quite low, as confirmed
17. Jan Zglinski, ‘Who Owns Football? The Future of Sports Governance and Regulation after European Superleague’, European Law Review 454, 2024.
18. Zglinski and FairSquare (n 5); Weatherill, ‘Saving Football from Itself’ (n 2); Miguel Poiares Maduro, ‘EU Law and Sports: A Match Made in Hell or in Heaven?’ in Jeremias Adams-Prassl and others (eds), The Internal Market Ideal: Essays in Honour of Stephen Weatherill, Oxford University Press, 2024.
19. See amongst others Judgment of the Court of Justice of 12 December 1974, Walrave a Koch (36/74, EU:C:1974:140); Judgment of the Court of Justice of 18 July 2006, Meca-Medina and Majcen v Commission (C-519/04 P, EU:C:2006:492). See also Stephen Weatherill, Principles and Practice in EU Sports Law, Oxford University Press, 2017, Chapters 4 and 5.
by the Court of Justice on many occasions.20 When obstacles to trade are likely to arise due to divergent national measures, creating different levels of protection and hindering the free movement of products and services, Articles 53(1), 62, and 114 TFEU allow the EU legislature to take necessary action. Existing discrepancies in sports regulation hinder cross-border economic activities, justifying EU intervention to establish common standards. Moreover, in setting standards for governance in football, the EU could draw inspiration from other sector-specific legislation designed to establish ex-ante standards to supplement the ex-post application of competition law. For example, the EU adopted the Digital Markets Act and the Digital Services Act based on Article 114 TFEU.21
The Digital Markets Act assumes that powerful platforms must be held to defined standards of conduct because of their power to act as ‘gatekeepers’ in the sector. What are governing bodies in football if not ‘gatekeepers’?
Additionally, the EU could draw inspiration from the recently adopted Corporate Sustainability Due Diligence Directive, which finds its legal basis in Articles 114, 50(1), 50(2)(g), and 54 TFEU.22 These provisions empower the EU to enact directives to attain freedom of establishment, coordinating safeguards required from companies or firms constituted under civil or commercial law, including cooperative societies and other legal persons governed by public or private law. There is an exception for non-profit companies. However, we believe that football governing bodies are not exempted, as evidenced by the increasing commercialisation of football. And the EU’s inspiration from this directive could go beyond its formal legal basis. The directive lays down obligations for companies regarding human rights and environmental adverse impacts, which could also feasibly and helpfully apply to football.
Given the transnational nature of football governance and the need for consistent standards, we believe an EU regulation is the appropriate legislative means. Football competitions are inherently cross-border, and governance issues require uniformity to prevent discrepancies that could disrupt the integrity of football governance. An EU directive would allow the principles to be adapted through implementation within the national context, but given the cross-border nature of sports governance, we recommend instead an EU regulation. Only this can deliver uniformity and immediate application of common rules across all Member States.
What Should the EU Regulate in Football Governance?
Let us move to the details. The EU should regulate football governance, but what shape should such legislation take? What should be its substance? We believe the EU should demand that football governing bodies separate
20. Judgment of the Court of Justice of 12 December 2006, Germany v Parliament and Council (C-380/03, EU:C:2006:772, para 41); Judgment of the Court of Justice of 4 May 2016, Poland v Parliament and Council (C-358/14, EU:C:2016:323, para 36); Judgment of the Court of Justice of 4 May 2016, Philip Morris Brands and Others (C-547/14, EU:C:2016:325, para 62); Judgment of the Court of Justice of 3 December 2019, Czech Republic v Parliament and Council (C-482/17, EU:C:2019:1035, para 37).
21. Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act) (Text with EEA relevance) 2022 (OJ L); Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market For Digital Services and amending Directive 2000/31/EC (Digital Services Act) (Text with EEA relevance) 2022 (OJ L).
22. Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859 (Text with EEA relevance) 2024.
their regulatory and commercial functions to tackle the endemic conflict of interest that currently plagues their activities. The EU’s football governance legislation should impose good governance standards as licensing requirements or prerequisites for the ability of football governing bodies to operate in the EU internal market. The EU could also legislate to protect the European sports model, whose principles and values overlap with good governance requirements.
There are many sources of inspiration for EU legislation. We draw inspiration from the judgments of the Court of Justice in MOTOE, 23 European Superleague Company, 24 International Skating Union25 and Diarra, 26 where the Court of Justice required sporting rules to be open, objective, clear, precise, transparent, non-discriminatory, and proportionate, subject to restrictions, obligations and review. On top of that, we draw inspiration from the abovementioned conclusions and resolutions of the Council and the European Parliament concerning sports governance. Moreover, the EU expert group issued a recommendation containing principles of good governance in sports in 2013.27 We also looked into what the Council of Europe has contributed to the debate, especially the reports authored in 2018 by Anne Brasseur28 and Mogens Jensen.29 To consider the rules of sporting governing bodies, we analysed the International Olympic Committee’s Basic Universal Principles of Good Governance within the Olympic Movement.30 Consequently, we have chosen to divide the good governance principles into eight categories, which we believe the EU could use as inspiration for its legislation.
1. Democratic governance and representation
Good governance in sports requires democratic structures, including regular, transparent elections and decision-making processes. Governance bodies must ensure that all relevant stakeholders—players, fans, clubs, and leagues—are fairly represented. This includes having strong internal checks and balances to prevent the concentration of power and ensure broad participation in governance decisions.
2. Ethics and integrity
Integrity is essential for maintaining trust in sports governance. This includes implementing independent oversight mechanisms, adhering to codes of ethics, and ensuring that decisions are free from conflicts of interest. Measures to combat corruption, financial misconduct, and abuses within the sport, such as matchfixing and doping, are critical. Education and awareness-raising initiatives further reinforce the culture of integrity.
23. Judgment of the Court of Justice of 1 July 2008, MOTOE (C-49/07, EU:C:2008:376).
24. Judgment of the Court of Justice, European Superleague Company
25. Judgment of the Court of Justice of 21 December 2023, International Skating Union v Commission (C-124/21 P, EU:C:2023:1012).
26. Judgment of the Court of Justice, FIFA.
27. EU Expert Group ‘Good Governance’, Principles of Good Governance in Sport, 2013.
28. Anne Brasseur, ‘Good Football Governance’, Council of Europe, Parliamentary Assembly, 2018.
29. Mogens Jensen, ‘Working towards a Framework for Modern Sports Governance’, Council of Europe, Parliamentary Assembly, 2018.
30. ‘Basic Universal Principles of Good Governance within the Olympic Movement’, International Olympic Committee, 2022.
3. Transparency and accountability
Transparency in decision-making and financial management is a cornerstone of effective sports governance. Football governing bodies should publicly communicate their strategic plans, financial reports, and governance structures. Accountability mechanisms, such as external audits and independent evaluations, ensure that actions align with stakeholders’ interests and that football governance remains open and accessible.
4. Human rights
Protecting the rights of players and other participants is fundamental. This includes ensuring nondiscrimination, freedom of association, and access to fair procedures in disciplinary matters. Governance structures should also safeguard against exploitation and abuse while promoting a culture that respects and upholds the dignity and rights of all individuals involved in football.
5. Diversity and inclusion
Football governing bodies should strive for greater diversity in leadership roles and ensure inclusive decisionmaking processes. This means improving the representation of women and minority groups and providing equal opportunities for all participants. Efforts to address gender disparities and promote a more inclusive environment are essential for fair and balanced football governance.
6. Social responsibility and solidarity
Football organisations are responsible for contributing positively to their communities. This includes supporting financial solidarity between professional and grassroots levels, engaging in community development, and promoting sustainability. By integrating social and environmental goals into their strategies, sports bodies can ensure their activities benefit the broader society.
7. Health, safety, and well-being
Ensuring players’ physical and mental well-being is critical to governance. This includes providing safe environments, adequate medical support, and protection against harassment and abuse. A strong focus on safeguarding the welfare of all participants helps create a supportive atmosphere that enables players to thrive.
8. Regulation and structural adjustments
Effective governance requires clear regulatory frameworks and regular structural reviews to ensure best practices. This involves regulating intermediaries like agents, separating regulatory and commercial functions, and establishing independent oversight bodies. Licensing requirements and adherence to governance standards ensure that organisations operate fairly and transparently, aligning with broader principles of good governance.
The principles of good football governance partially overlap with the foundations of the European sports model. In the European Superleague Company, the Court considered sporting competition’s open, merit-based nature, ensuring a certain form of solidarity redistribution within football, a legitimate objective.31 On top of that, we again draw inspiration from the sporting conclusions and resolutions of the European Parliament and the Council. We also draw on the contents of the European Citizens’ Initiative ‘Win It On The Pitch’, registered in 2012.32 Consequently, we grouped the principles of the European sports model into five categories that may serve as an inspiration for the content of EU legislation.
1. Values-based sport and social functions
The European sports model is built on inclusiveness, solidarity, and respect for human rights. It sees football as a tool for social cohesion and integration. It promotes the idea that football should contribute positively to society by fostering community engagement and supporting educational, cultural, and health-related activities. These values ensure that the sport remains a force for good beyond just competitive results.
2. Solidarity and financial redistribution
The European sports model emphasises solidarity, where financial resources from elite levels are redistributed to support grassroots sports. This approach ensures balanced growth across all levels of football, creating opportunities for development and maintaining the sustainability of local clubs. It aims to build a sports ecosystem where the benefits of financial success are shared, supporting the sport’s overall structure and accessibility.
3. Openness, promotion, and relegation
A key feature of the model is its open competition structure, with merit-based promotion and relegation systems. This ensures that performance determines advancement rather than closed membership, fostering fairness and maintaining a competitive balance. It prevents financial disparities from dominating and keeps the competition dynamic, allowing clubs to progress or fall based on their sporting achievements
4. Grassroots connections and voluntary participation
The model is characterised by strong links between grassroots and elite sports, emphasising the role of community-based participation and volunteer-driven activities. This relationship provides a pathway for young players and ensures that sports remain accessible and rooted in local communities. It also highlights football’s social, cultural, and educational functions, which help strengthen community ties and promote wider engagement.
31. Judgment of the Court of Justice, European Superleague Company, paras 196, 253.
32. ‘European Citizens’ Initiative: Win It On The Pitch’, 2012.
5. Sustainability and fair financial management
Financial stability and responsible management are crucial principles of the European sports model. Clubs are encouraged to adopt sustainable financial practices that avoid excessive debt and ensure long-term viability. The focus on fair financial management also aims to prevent practices that create unfair competitive advantages, ensuring that clubs compete on an even playing field while maintaining their economic health.
Legal rules without enforcement mechanisms and sanctions lose much of their effectiveness. So, what enforcement mechanism should the EU football regulation have? We believe that central to this framework could be the creation of an independent EU Football Governance Agency responsible for monitoring compliance, conducting audits, investigating breaches, and imposing sanctions where necessary. The enforcement framework would also include a sanctioning regime, with penalties ranging from fines and public reprimands to suspending licenses and exclusion from EU competitions for non-compliant organisations. Additionally, national sports regulators would help ensure that smaller, grassroots organisations comply with the regulation’s basic governance principles while leaving enough flexibility for local adaptations. An independent judicial review would ensure accountability and fairness, allowing organisations to appeal decisions by the EU Football Governance Agency. Through this comprehensive framework—combining centralised EU oversight, national cooperation, and public accountability—the EU football regulation would create a robust system for enforcing governance standards across all levels of football.
Conclusion
Our proposal for EU legislative intervention in football governance offers a necessary framework for reforming the deeply ingrained issues within current governance structures. While self-regulation of governing bodies is essential for the integrity of sports, it has proven flawed. It is tainted by conflicts of interest, a lack of transparency, and insufficient representation of key stakeholders, including players and fans. State regulation has also shown to be inefficient, primarily because of threats to exclude national teams from international competitions. Moreover, sport as a transnational activity requires transnational regulation. As a transnational entity capable of imposing regulatory standards across borders, the EU is uniquely well-positioned to enforce principles of good governance and ensure that sporting bodies operate more accountably and inclusively. By legislating standards of transparency, ethical governance, and stakeholder representation, the EU can help reshape sports governance. The point is not to replace football governing bodies but to empower them to adhere to higher standards of fairness and integrity. Through this approach, the EU could create a positive ripple effect beyond its borders, encouraging global bodies in football and sports more generally to align with these standards. This would improve governance on an international scale. Such a legislative intervention would also protect the European sports model, emphasising solidarity, sustainability, and merit-based competition, ensuring that sports remain a force for social cohesion, inclusivity, and fair play. While concerns about regulatory overreach are valid, the EU’s role would be to enhance, not undermine, the autonomy of football governing bodies by ensuring they adhere to democratic, transparent, and accountable practices. This is the right and timely step forward to preserve the integrity of football and ensure that it operates for the benefit of all stakeholders. The EU’s time is now - let the momentum build!
HIGHLIGHT F THE WEEK S O
Official publication today: Court of Justice welcomes new judges, advocates general, and leadership assignments
Monday 25 November
The Court of Justice of the European Union (CJEU) has recently undertaken a series of key organizational changes and appointments.
Read on EU Law Live
General Court to hear Beneo’s action against Commission’s refusal to authorise health claim on isomaltulose
Monday 25 November
Official publication was made of an action brought on 20 September 2024 by Beneo against the European Commission, seeking the annulment of Commission Regulation (EU) 2024/2105 of 31 July 2024 refusing to authorise a health claim made on foods, other than those referring to the reduction of disease risk and to children’s development and health: Case T-489/24.
Read on EU Law Live
India’s APEDA challengs EU Commission’s document access denial: official publication today
Monday 25 November
The Agricultural and Processed Food Products Export Development Authority (APEDA), based in New Delhi, and Brusselsbased lawyer Bernard O’Connor brought a case (T-458/24) against the European Commission before the General Court of the European Union.
Read on EU Law Live
Italian Supreme Court seeks Court of Justice’s guidance on disability rights in teacher mobility rules
Monday 25 November
The Italian Supreme Court (Corte suprema di cassazione) has referred a case (C-597/24, Zirvatta) to the European Court of Justice (ECJ) concerning the compatibility of Italian legislation with EU disability rights.
Read on EU Law Live
Preliminary reference seeking clarification of qualification for refugee status and acts of persecution, published in OJ
Monday 25 November
Official publication was made of a preliminary ruling request, lodged by the Federal Administrative Court of Austria, in the context of a case concerning a decision of the Bundesamt für Fremdenwesen und Asyl (Federal Office for Immigration and Asylum, Austria), by which the appellant’s application for international protection was dismissed on substantive grounds: Hama (C-596/24).
Read on EU Law Live
Preliminary ruling request on compatibility with the free movement provisions of tax legislation not allowing companies resident abroad to benefit from ensuing benefits
Monday 25 November
The Court of Justice is expected to hear a preliminary ruling request, lodged from the Corte Suprema di Cassazione (Italy), in the context of an appeal on a point of law brought by the Agenzia delle Entrate (Revenue Agency, Italy; ‘the Agency’) against judgment No 4061/06/2019 of the Commissione Tributaria Regionale della Lombardia (Regional Tax Court, Lombardy, Italy): Société Générale and Others (C-592/24).
Read on EU Law Live
EU challenges China’s anti-dumping tariffs on brandy at WTO
Monday 25 November
The European Commission formally requested consultations at the World Trade Organization (WTO) to challenge China’s provisional anti-dumping tariffs on EU brandy imports.
Read on EU Law Live
FRA, Eurostat and European Institute for Gender Equality (EIGE) publish an EU gender-based violence survey
Tuesday 26 November
The European Union Agency for Fundamental Rights (FRA), Eurostat and European Institute for Gender Equality (EIGE) published a report named “EU gender-based violence survey – Key results. Experiences of women in the EU-27”.
Read on EU Law Live
Preliminary ruling request concerning the mandatory detention of individuals under European Arrest Warrant, published in OJ
Tuesday 26 November
The Sofiyski gradski sad (Sofia City Court, Bulgaria) referred a question to the Court of Justice of the European Union (CJEU) concerning the mandatory detention of individuals under European arrest warrants.
Read on EU Law Live
Court of Justice to stream hearing of Whatsapp’s appeal challenging decision of the EDPB on a dispute under Article 65(1)(a) GDPR
Tuesday 26 November
The Court of Justice’s Grand Chamber hearing in WhatsApp Ireland v Comité européen de la protection des données (C-97/23 P) was streamed on the Court of Justice’s website.
Read on EU Law Live
Preliminary reference on compatibility with EU law of national rules providing no express time period for penalty proceedings before Italian Competition Authority
Tuesday 26 November
Official publication was made of a request for a preliminary ruling from the Consiglio di Stato (Italy) lodged on 10 September 2024 in Imballaggi Piemontesi Srl v Autorità Garante della Concorrenza e del Mercato (AGCM): Imballaggi Piemontesi (C-588/24).
Read on EU Law Live
Commission confirms Estonia violated State aid rules by leasing agricultural land at a rate below the market price
Tuesday 26 November
The European Commission concluded that Estonia breached EU State aid rules, by renting agricultural land at a rate below market price to Tartu Agro AS, an Estonian private company producing among other things milk, meat and cereals.
Read on EU Law Live
General Court confirms Commission’s revised fine on HSBC Holdings for infringement of competition law in the Euro Interest Rate Derivatives sector
Wednesday 27 November
The General Court rendered its judgment in HSBC Holdings and Others v Commission (T-561/21), a case concerning a 2021 decision of the European Commission imposing a fine on HSBC for breaches of competition law in relation to Euro Interest Rate Derivatives.
Read on EU Law Live
Ombudsman finds maladministration in Commission’s handling of Tunisia meeting documents
Wednesday 27 November
The European Ombudsman concluded that the European Commission mishandled a public access request concerning documents related to a high-level meeting on June 11, 2023, between EU Commission President Ursula von der Leyen, Italian and Dutch Prime Ministers, and Tunisia’s President.
Read on EU Law Live
General Court upholds directive applying internal gas market rules to Nord Stream 2 pipeline
Wednesday 27 November
The General Court dismissed an action brought by Nord Stream 2 AG, a subsidiary of Gazprom, against a 2019 amendment to the EU Gas Directive.
Read on EU Law Live
General Court dismisses two actions against Commission’s classification and labelling of certain substances as hazardous
Wednesday 27 November
The Sixth Chamber of the General Court delivered its judgment in two cases concerning actions against Commission Delegated Regulation (EU) 2022/692 of 16 February 2022 amending, for the purposes of its adaptation to technical and scientific progress, Regulation (EC) 1272/2008 of the European Parliament and of the Council on classification, labelling and packaging of substances and mixtures (CLP Regulation).
Read on EU Law Live
Basque police age limit for recruitment not discriminatory, European Court of Human Rights rules
Wednesday 27 November
The European Court of Human Rights ruled in the case Ferrero Quintana v. Spain that a maximum age limit of 35 for recruiting officers in the Basque Country’s police force (Ertzaintza) did not violate anti-discrimination laws.
Read on EU Law Live
Von der Leyen outlines vision for new College of Commissioners at European Parliament
Wednesday 27 November
President Ursula von der Leyen delivered her speech at the European Parliament Plenary on the new College of Commissioners and its programme.
Read on EU Law Live
EFTA Court to rule on insurance claim assignments: Advisory Opinion request, published in OJ
Thursday 28 November
The Fürstliches Obergericht (Princely Court of Appeal) requested an Advisory Opinion from the EFTA Court regarding a legal question arising in the case of Söderberg & Partners AS v Gable Insurance AG in Konkurs (Case E-17/24).
Read on EU Law Live
Court of Justice defines concept of ‘pension funds’ for the purposes of statistical reporting obligations in Regulation 2018/231
Thursday 28 November
On 28th November, the Court of Justice handed down judgment in Bayerische Ärtzeversorgung and Others (C-758/22 and C-579/22), following two requests for a preliminary ruling concerning the interpretation of Regulation 2018/231 on statistical reporting requirements for pension funds, and of Regulation 549/2013 on the European system of national and regional accounts in the European Union.
Read on EU Law Live
National rules requiring a second judicial formation to approve a plea bargain are compatible with Article 19(1)(2) TEU, holds Court of Justice
Thursday 28 November
On 28th November, the Court of Justice handed down judgment in PT (C-432/22) and PT II (C-398/23), following requests for a preliminary ruling from the Specialised Criminal Court, Bulgaria (C-498/23), and from the Sofiyski gradski sad, Bulgaria (C-398/23), concerning the interpretation of Article 5 of Framework Decision 2004/757 laying down minimum criminal provisions on the constituent elements of criminal acts and penalties in the field of illicit drug; Article 4 of Framework Decision 2008/841 on the fight against organised crime; Articles 6(1) and (3) of Directive 2012/13 on the right to information in criminal proceedings; and Articles 20, 47(1), 48(2) and 52(1) of the Charter.
Read on EU Law Live
Jurisdiction for cross-border IT services: Court of Justice delivers judgment on software development disputes
Thursday 28 November
The Court of Justice delivered its judgment on a novel issue in VariusSystems (Case C-526/23) regarding the international jurisdiction of courts in cross-border IT service contracts.
Read on EU Law Live
Derogation under Article 14(5)(c) GDPR applies to all data which the controller has not obtained from the data subject: Court of Justice concludes in Másdi (C-169/23)
Thursday 28 November
The Court of Justice delivered its judgment in Másdi (C-169/23), a request for a preliminary ruling from the Supreme Court of Hungary concerning the interpretation of Article 14(5)(c) of the GDPR.
Read on EU Law Live
Court of Justice dismisses appeals against countervailing duties imposed on imports of glass fibre fabrics originating from China and Egypt
Thursday 28 November
The Court of Justice delivered its judgment in two joined appeals against the judgments of the General Court, which dismissed the appellants applications regarding the annulment of two Commission Implementing Regulations regarding countervailing duties imposed on imports of woven and/or stitched glass fibre fabrics and filament glass fibre fabrics: Hengshi Egypt Fiberglass Fabrics and Jushi Egypt for Fiberglass Industry v Commission and Jushi Egypt for Fiberglass Industry v Commission (C-269/23 P and C-272/23 P).
Read on EU Law Live
Court of Justice delivers judgment on data collection necessity in criminal proceedings
Thursday 28 November
The Court of Justice delivered its judgment in case Ministerstvo na vatreshnite raboti (Enregistrement de données biométriques and génétiques II) (C-80/23), a case involving the Sofiyski gradski sad (Sofia City Court) seeking a preliminary ruling from the Court of Justice concerning the application of Directive (EU) 2016/680.
Read on EU Law Live
AG Medina delivers Opinion on anti-dumping duties imposed on imports of ammonium nitrate originating in Russia
Thursday 28 November
AG Medina delivered her Opinion concerning an appeal brought by the European Commission and Fertilizers Europe seeking to have the judgment of 5 July 2023, Nevinnomysskiy Azot and NAK ‘Azot’ v Commission (T-126/21) set aside.
Read on EU Law Live
German law provisions on the operation of electricity market found incompatible with Directive (EU) 2019/944, by Court of Justice
Thursday 28 November
In ENGIE Deutschland (C-293/23), the Fifth Chamber of the Court of Justice handed down judgment in a case regarding a preliminary reference on the interpretation of Article 2(28) and (29) and Article 30 et seq. of Directive (EU) 2019/944 of the European Parliament and of the Council concerning common rules for the internal market in electricity and amending Directive 2012/27/EU.
Read on EU Law Live
Commission fines Pierre Cardin and licensee Ahlers for violation of Article 101 TFEU and Article 53 EEA Agreement
Thursday 28 November
The European Commission fined Pierre Cardin and its licensee, Ahlers, a total of €5.7 million for breaching EU antitrust rules.
Read on EU Law Live
Commission acts on non-compliance with directives in cybersecurity and critical infrastructure
Thursday 28 November
The European Commission initiated infringement procedures against numerous Member States for failing to fully transpose key EU directives into national law by the required deadlines.
Read on EU Law Live
AG Richard de la Tour: Regulation 2019/111 does not affect the application of a bilateral agreement concluded by a Member State with a third country prior to the Member State’s accession by the EU
Thursday 28 November
Advocate General Richard de la Tour delivered his Opinion in Anikovi (C-395/23), a request for a preliminary ruling from the Sofia District Court, Bulgaria, concerning the interpretation of Regulation 2019/1111 on jurisdiction, the recognition and enforcement of decisions in matrimonial matters and the matters of parental responsibility, and on international child abduction (commonly referred to as the ‘Brussels II-bis’ Regulation).
Read on EU Law Live
Certain electric carriages not covered by heading 8713 set out in Council Regulation (EEC) 2658/87
Thursday 28 November
The Eighth Chamber of the Court of Justice delivered its judgment in two cases concerning preliminary ruling requests on whether electric carriages comprising certain properties may be classified under headings 8703 and 8713 of the Combined Nomenclature (hereinafter ‘the CN’), despite Commission Implementing Regulation (EU) 2021/1367 of 6 August 2021.
Read on EU Law Live
Commission’s guidance on EU funding to advance independent living for persons with disabilities, published in OJ
Friday 29 November
Official publication was made of a Commission Notice on guidance on independent living and inclusion in the community of persons with disabilities in the context of EU funding.
Read on EU Law Live
ECA Special Report identifies shortcomings in implementing and monitoring of measures against harmful tax regimes and tax avoidance
Friday 29 November
The European Court of Auditors published its Special Report 27/2024 on combatting harmful tax regimes and corporate tax avoidance, which found that the EU has established a first line of defence, but there are shortcomings in the way measures are implemented and monitored.
Read on EU Law Live
EFTA Surveillance Authority: Norway, Liechtenstein and Iceland have reduced overall State aid spending
Friday 29 November
According to the Annual Scoreboard of the EFTA Surveillance Authority, the EEA EFTA States have reduced their State aid spending in 2022. Norway, Liechtenstein and Iceland have spent altogether a total of EUR 7.2 billion in 2022, representing a nominal reduction of around 15% from 2021.
Read on EU Law Live
EFTA Court delivers judgement concerning claim for damages arising under the Collective Redundancies Directive
Friday 29 November
The EFTA Court delivered its judgment in Case E-3/24 Margrét Rósa Kristjánsdóttir v Icelandic Health Insurance (Sjúkratryggingar Íslands) regarding an advisory opinion requested by the Reykjavík District Court.
Read on EU Law Live