Article – Page 14 – KSLR EU Law Blog

Robin Hood (tax): really an EU outlaw?

Alin Fouladvand, MSc Risk and Finance, London School of Economics

Marco Guerra, LLM University of Milan; LLM Student, King’s College London

1. Introduction

On 28 September 2011, the European Commission proposed a harmonised Financial Transaction Tax (FTT) aimed, among other reasons, at the reduction of competitive distortions in the single market[1]. In the absence of an unanimous agreement between all EU Member States, a subgroup of them (the so-called FTT Zone) engaged into a procedure of “enhanced cooperation” for a common FTT[2], authorised by the European Parliament on 12 December 2012 and by the EU Council on 22 January 2013. On 14 February 2013, the European Commission published its detailed proposal, approved by the European Parliament in July 2013 and expected to enter into force on 1 January 2014.

The FTT will be levied to financial transactions between financial institutions charging 0.1% for the exchange of shares and bonds and 0.01% for derivative contracts, on the requirement that at least one party to the transaction is established in FTT Zone and that a financial institution established in the FTT Zone is party to the transaction. The United Kingdom, supported by several EU members, challenged this proposal urging the opposition to the tax due to its risk of damaging feeble economic growth and its compatibility with European Union treaties[3].Over all, the United Kingdom criticised the residence principle that forced the financial institutions to be treated as resident in the participating member states and therefore to have to make tax declarations and to pay tax, simply because they enter into transactions with other financial institutions resident in a participating state, establishing there the infrastructures for meeting those tax liabilities[4].

2. The EU Council’s opinion

On 6 September 2013 the European Union Council’s legal service published a (not binding) opinion where it is stated that this type of levy “would constitute an obstacle to the free movement of capital as well to the freedom to provide services”[5]^,[6]. In the following part we would aim at understanding more widely the reasons that could have inspired this position starting from the analysis of the treaties to clear if the FTT contravenes the free movement of capital.

According to the Article 63 of the Treaty on the Functioning of the European Union (hereafter, TFEU),  ”[…], all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited“.

The jurisprudence of the European Court of Justice has developed a three-step approach to verify the compatibility of a provision in the light of the TFEU freedoms[7]. With reference to the FTT, this test involves the following questions:

(i) Does the FTT fall under the scope of the free movement of capital?

(ii) If so, does the FTT constitute a restriction of the free movement of capital?

(iii) If so, is the FTT justified?

Considering the first question, we observe that the TFEU does not define the term “movement of capital”. In the case Trummer and Mayer[8] the CJEU has indicated that, “its meaning should be determined by reference to the nomenclature in Annex I to Council Directive 88/361/EEC of 24 June 1988”, that covers “all the operations necessary for the purposes of capital movements: conclusion and performance of the transaction and related transfers”[9]. Given the above we can conclude that the FTT falls under the scope of the Article 63 of TFEU.

With reference to the second, and more critical, question we note that the legal opinion published by the European Union Council’s legal service expresses concerns that the proposed Directive “would render less attractive financial transactions with financial institutions located outside the participating Member States, since these institutions would have to pay the FTT at different rates in different countries and the counterparty may be unwilling to be liable to that tax and to face, on these grounds, legal uncertainty and possible disputes with the authorities of the participating Member State”.

In other words, the FTT would impose a duty on those transacting with entities in the FTT zone and, therefore, restrict the free movement of capital guaranteed by TFEU by producing “an effect equivalent to that of a duty imposed in return of the possibility to enter into a transaction with an institution located in a participating Member State”[10].

Further into the second question, the proposed Directive applies the “counterparty” factor in a discriminatory manner. The question of free movement of capital rises due to the fact that these rules limit issuing of financial instruments by a party from a participating Member State in non-participating Member States. The reason being that these transactions would be subject to taxation with the FTT, in clear contrast to transactions to which the tax does not apply. It results from Sandoz[11] that imposing a barrier to investment in other Member States is a restriction on free movement of capital and Article TFEU 63.

In addition, the FTT is indirectly discriminatory, because it makes more expensive for a company based in a “non-FTT” state to conduct business in a “FTT state” (and vice versa) in comparison to its local competitors.

3. The debate on the FTT

Contrary to the Council’s opinion, it has been observed that the FTT does not constitute a discriminatory restriction of the free movement of capital. This is because the levy applies to each financial transaction with determined elements and no distinctions are made between cross-border and domestic capital transactions[12]. As explained by the jurisprudence of the Court of Justice of the EU (CJEU) the discrimination can arise through the application of different rules to comparable situations or through the application of the same rule to different situations[13]. However, this opinion is not universally accepted between scholars. It is believed that the FTT could limit the circulation of the capitals in the common market and, furthermore, it is “considered as a high tax level since in some cases […] it will tax non-existent wealth”[14].

Nevertheless, the European Commission’s own legal advisors refused the Council’s legal opinion, observing that, actually, every single tax levied on a cross-border transaction limits the movement of the capitals[15]. They observed that “[…] the fact that FTT would [not] exist outside [the] FTT area, is merely a disparity which is neutral from the perspective of the Treaty freedoms”.

The last question refers to the two derogations stipulated by Article 65 TFEU, whereby these measures should not be in the form of arbitrary discrimination or disguised restriction on free movement of capital. The first derogation, stipulated in Article 65(1)(a) TFEU is specific to tax and stipulates acceptable tax provisions that existed at the end of 1993 and, thus, it is not applicable on the FTT. The second set of derogations is stipulated in article 65(1)(b) TFEU and consists of three possible general derogations to the free movement of capital: to prevent illegal tax evasion, for the purposes of administrative or statistical information, and on grounds of public policy or public security. Clearly the FTT does not carry the prerequisites for the first two. For the latter to be applicable, the CJEU has determined that it is necessary to identify and prove “a genuine and sufficiently serious threat to a fundamental interest of society”[16]. The FTT aims to curb speculation and this is in the interest of public security, however the latter derogation should be used carefully. In Albore[17] the CJEU stated that a reference to public policy or security was not in itself sufficient to justify restrictive measures. It must be proven that alternative treatments would expose the Member State to real risks that could not be countered by other, less restrictive measures.[18] Although the economic rational behind the FTT is understandable, the threat to national security is not clearly defined and the risk seriousness of not adopting a FTT is not possible to answer at this point. Also, according to Verkoojen[19] a restriction of a fundamental freedom can be only admissible if it justifiable in virtue of the general interest, excluding thus purely economic reason[20]. This makes the derogation in article 65(1)(b) TFEU far from applicable. To conclude, none of the express derogations in article 65(1) TFEU are applicable to the FTT.

4. Conclusion

Currently the question of the legitimacy of a FTT is still open also within the European institutions; responding to the question posed by the EU member of Parliament Marc Tarabella on the potential violation of the free movement of capital as observed in the above mentioned legal opinion, the Council answered that “a position has not been reached”[21].

Thus, it clearly appears how the debate on the compatibility of the financial transactions’ taxation with the EU Treaty is not yet solved. We can only observe that if there is not a definitive juridical approach in the academic debate, a consideration can be expressed exclusively based on the tax policy.

As known, since 2013 Italy implemented a tax on financial transactions; accordingly, several Italian operators started to move their business to other countries where the tax was not levied and the expected revenue fell considerably[22]. The same it was already happened in Sweden where, after the introduction of a transaction tax in 1984[23].

In conclusion, the protection of a market (the capitals’ one, in our case) is not only a legal issue but should be faced considering the real effects on the economy. After all, since the Chicago School, economic arguments have been developed to claim that taxes are costs that burden the functioning of the financial markets. However, no legal principle prevents sovereign states from introducing (even stupid) taxes if they democratically decide to[24].

[1] See IP/11/1085, Financial Transaction Tax: Making the financial sector pay its fair share, European Commission, Press release. For a technycal analysis of the proposal see Adam Blakemore, Proposal for a European Union Financial Transaction tax, Journal of International Banking and Financial Law (2012) 2 JIBFL 104.

[2] The subgroup includes Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain.

[3] See Case C-209/13, Action brought on 18 April 2013 by United Kingdom of Great Britain and Northern Ireland v Council of the European Union.

[4] Thomas Richter, Financial transaction tax will “damage” economy, Financial Times, 8 September 2013.

[5] Council of the European Union, Opinion of the legal service, 2013/0045 (CNS), § 40.

[6] Huw Jones, 5-EU lawyers say transaction tax plan is illegal, Reuters, 10 September 2013; Louise Armistead, EU lawyers say financial transaction taxi s illegal, The Telegraph, 10 September 2013.

[7] Dennis Weber, Otto Marres, Taxing the Financial Sector: Financial Taxes, Bank Levies and More, IBFD, 2012, p. 124.

[8] ECJ, 19 March 1999, Case C-222/97.

[9] Furthermore, the CJEU has also indicated that transactions not listed in the nomenclature may nonetheless constitute a capital movement.

[10] Council of the European Union, Opinion of the legal service, 2013/0045 (CNS), § 40.

[11] Case C-439/97, Sandoz GmbH v. Finanzlandesdirektion für Wien, Niederösterreich und Burgenland, para. 19. – ECR 1999, p. I-7041.

[12] Dennis Weber, Otto Marres, Taxing the Financial Sector: Financial Taxes, Bank Levies and More, IBFD, 2012, p. 131.

[13] Inter alia, see Case C-279/93 (Schumacker) and Case C-148/02 (Garcia Avello).

[14] Pablo A. Hernandez Gonzalez-Barreda, On the European way to FTT under Enhanced Cooperation: Multi-speed Europe or Shorcut?, Intertax, Vol. 31, Issue 4, 2013.

[15] Non-paper by the Commission services, Response to the opinion of the legal service of the Council on the legality of the counterparty-based deemed establishment of financial institutions.

[16] Case C-54/99 Eglise de Scientologie [2000] ECR I-1335, para. 18.

[17] Case C-423/98 Albore [2000] ECR I-5965.

[18] Case C-423/98 Albore [2000] ECR I-5965, para. 22.

[19] Case C-35/98, Staatssecretaris van Financien v. Verkoojen, para. 46. – ECR 2000, p. I-4071.

[20] Case C-311/97, Royal Bank of Scotland v. Greece, para. 48.

[21] Question E-010636-13, 11 November 2013.

[22] http://www.economist.com/blogs/economist-explains/2013/09/economist-explains-1.

[23] M. Wiberg, We tried a Tobin tax and it didn’t work, Financial Times, 15 Aptil 2013. Contra, B. Ségol, Europe’s Tobin taxi s designed to work, Financial Times, 17 April 2013.

[24] Federico Fabbrini, The financial transaction tax: legal and political challenges towards a Euro-zone Fiscal Capacity, Centro studi sul federalismo, October 2013.

Free Movement of Companies within the EU – The Never-Ending Saga

Jorge Miguel Ribeiro

Trainee Lawyer and Collaborating Member of Centre of Studies in European Union Law of University of Minho

1. Introduction

The creation of an area with no internal borders where free movement is guaranteed is one of the greatest objectives of the European Union. Nowadays, a number of obstacles still persist regarding companies’ cross-border mobility.

The movement of companies within the European Union is safeguarded under freedom of establishment. Articles 49 and 54 of the Treaty on the Functioning of the European Union (TFEU) explicitly recognises freedom of establishment for companies, however they still do not fully enjoy this freedom. The scope of the TFEU rules still awaits true implementation. This article will give an overlook to the current panorama, presenting the different theories and the existing barriers in light of the most recent Court of Justice of the European Union (CJEU) decisions.

2. Controversial Theories

The problem is related to the lack of a single transfer regime across the Member States. Therefore, throughout Europe, to determine which company law is applicable to a particular company, we have two existing theories: the real seat theory and the incorporation theory.

On the one hand, the real seat theory[1] provides that the place where the company has its ‘real seat’ (its principal place of business) will determine which company law system is applicable to company relationships. On the other hand, for the incorporation theory[2] the company and its relationships are subjected to the law of the country where they have their registered office, and in which they have been incorporated.

The greatest difference between the two theories is their effect on the cross-border transfer of the company seat, both from the home and host state perspective. The real seat theory brings some draconian limitations to the cross-border transfer of the real seat by making the company subject to different national legal order each time its real seat moves to another state.[3] The incorporation theory allows it by accepting in its legal order companies that are formed in other states without requiring a reincorporation. For the latter, it does not matter where the company’s real seat is located: once a company fulfils the formation requirements in its state of incorporation, it is recognised everywhere, but always subject to the rules of the incorporating state.[4]

As noted, the possibility of a cross-border transfer depends on Member States company’s private rules. Member States are free to decide on the appropriate conflict of law rule, and it is clear that if the incorporation theory dominated in the EU, there would be more freely moving companies.

3. The CJEU case law

This issue is also naturally influenced by last decade’s CJEU decisions. From Daily Mail to the most recent Vale decision, the Court moves back and forth in trying to fill the gap created by the absence of any harmonisation.

In Daily Mail[5] case, the Court ruled that the freedom of establishment did not confer to companies a right to transfer their central management and control to a Member State while retaining its status as incorporated in the home Member State. It was noted that companies, unlike natural persons, are creatures of the law and exist only by virtue of the national legislation that determines their incorporation and functioning. This decision was considered by a majority that the real seat doctrine and the Treaty rules in freedom of establishment may coexist, leading to a restrictive understanding of Treaty provisions by denying the transfer of a company’s head office from one Member State to another.

The developments continue with Centros[6] however with certain nuances. Centros Ltd. was registered in the UK. Its shares were owned by a Danish couple who wanted to establish a branch in Denmark, through which they would conduct all their business activities. Danish authorities denied their application on the grounds that Centros Ltd. was, in fact, seeking to establish a principal establishment in Denmark. The Court took a different approach though, providing that the practice of a Member State refusing the registration of a branch of a company formed in accordance with the law and having its registered office in another Member State created an obstacle to the freedom of establishment. This was the beginning of an important turn. Henceforth, any barriers by the host Member State against companies incorporated in another requiring setting up a secondary establishment there are prohibited. This is even if the host Member State is the place where the company runs all its business activities.

Centros was followed by Überseering[7] judgment. This case concerned a private limited company pretending to transfer its actual centre of administration from Netherlands, an incorporation state, to Germany, a real seat state, but continuing to be ruled by Dutch law. Germany had refused legal standing to the company based on the fact that it had not followed the required formation formalities under German law. In its decision, the Court recognised the right of a corporation formed in an EU Member State to move its real seat from its state of incorporation to another EU member state without losing its legal status as a corporate entity under the law of its origin state. Since then any obstacles from a host Member State in such a transfer (if the home state allows) are forbidden.

Inspire Art[8] was also a revolutionary cross border transfer seat case. Inspire Art was a company established in the UK, but doing business solely in its Dutch branch. The Court did not allow the Netherlands to impose legal obligations on companies that were incorporated in another Member State but conducts their business activities only in Netherlands. In this case, more comparable to Centros, the CJEU decided, once again, in favour of the freedom of establishment.

With the Centros/Uberseering/Inspire Art trilogy, regulatory competition has emerged.[9] The decision where to incorporate could henceforth be grounded on suitability considerations concerning each Member State company law standards. Every host Member State, despite following the real seat theory, were faced with this new status quo and challenged to make their company law more competitive.

After the trilogy and revisiting Daily Mail, comes Cartesio[10] judgment. Cartesio was the opportunity for the Court to finally elucidate the exit situations by deciding the possibility of Member States of origin to obstacle a cross-border transfer of seat and to continue this liberalisation of EU company law. Cartesio was a Hungarian company that intended to transfer its real seat to Italy but wished to remain ruled by Hungarian law. However, Hungarian law stated that a company has first to be dissolved in Hungary and then reincorporated under Italian law. Surprisingly, the Court did not overrule its Daily Mail decision, which allows the national law to restrict the seat transfer. In fact, the Court resuscitated the real seat theory, apparently ‘killed’ by the Centros/Uberseering/Inspire Art trilogy.

The Court clearly distinguishes exit and entry situations, and we should argue that freedom of establishment is only applicable in this latter case.

The Vale judgement was the latest case in this regard. The case, following the footsteps of Cartesio, concerned a company, Vale, established under Italian law. It wanted to be removed from the Italian register and later incorporated under Hungarian law, although recognizing its Italian predecessor as its legal predecessor, meaning all the former rights and obligations would be transferred to the new company. The Hungarian commercial court, pointing out that conversions under Hungarian law only applied to domestic situations, rejected this. The Court found Hungarian rules unacceptable because they treated companies differently whether the conversion was domestic or of a cross-border nature.[11] The Court, though, didn’t go further and reaffirm that companies exist only by virtue of the national law. Member States have the power to define the connecting factor required of a company to be regarded as a company under its national law. Once more the door was opened to change the scope of the right of establishment, and once again the door was closed with no impact.

4. Conclusion

Both the Cartesio and Vale cases did not bring the awaited positive outcome of stating clear rules on cross-border-transfer of the seat. Their decisions call attention for the inevitability of a “de-facto” harmonisation.[12] Case law of the CJEU only covers a few scenarios, distinguishing exit and entry cases, leaving too many questions unanswered. Furthermore, it seems that the Court accepts incorporation theory but it still respects the real seat theory.

It is tempting to say that it would be naive to continue believing in this ongoing process of shaping rules from Court decisions. The inertia of the European legislator is creating barriers to doing business across Europe, leading to legal uncertainty.[13] Such problems might be solved by implementing secondary law, namely through the coming into force of the 14^th Company Law Directive on companies cross-border seat transfer.[14]

A future Directive should clarify the ambit of the scope of freedom of establishment in the internal market, assessing clearly what conditions free movement of companies should be facilitated.

[1] Portugal, Spain, Italy, Germany, France are examples of real seat states.

[2] United Kingdom, United States, Switzerland, Ireland, Denmark and Netherlands are incorporation states.

[3] A company have to register or incorporate in the state where it has its central place of business. Likewise a company from an incorporation state that wish to move its administrative seat to an real seat state, may not be recognized as a company in this host state, without dissolution in the home state.

[4] However, in a certain number of incorporation states, there are exceptions to protect persons dealing with abroad companies carrying on business in their jurisdiction.

[5] Daily Mail and General Trust plc [1988] ECR 5483

[6] Case C-127/97 Centros Ltd v Erhvervs-og Selskabsstyrelsen [1999] ECR, I-1459. Centros was the first decision of the well-known Centros/Uberseering/Inspire Art Trilogy, considered an important turn in cross-board transfer seat issues.

[7] Case C-208/00 Uberseering BV v Nordic Construction Baumanagement GmbH [NCC] [2002] ECR I-9919

[8] Case C-167/01 Kamer van Koophandel en Fabriken voor Amsterdam v Inspire Art Ltd [2003] ECR I-10155

[9] Legal scholars question if this will lead to an improvement in the quality of company law; to a ‘race to the top’ or to the ‘bottom’ (Delaware effect) of legal standards?

[10] Case C-210/06 Cartesio Oktato´ Szola´ltato´ bt [2008] ECR I-9641.

[11] In Vale the Court extended the concept of freedom of establishment by including cross-border conversion situations in the host member state when such conversions are allowed domestically in that state.

[12] As Advocate General Poiares Maduro stated on Cartesio “the effective exercise of the freedom of establishment requires at least some degree of mutual recognition and coordination of these various systems of rules”

[13] The other existing alternatives for carrying out transfers are by way of an SE or a cross-border merger, considered with significant economic disadvantages in comparison with a Directive. In this regard see EAVA 3/2012, “Directive on the cross-border transfer of a company´s registered office”.

[14] In January 2013 the Commission launched a public consultation on the cross-border transfers of registered offices of companies. The majority of respondents stressed the urgency of a directive on this issue.

Through the Lens of Goods and Services: An Analysis of the CJEU

Matthew Foster

2^nd year LLB student at King’s College London

a. Introduction

The Court of Justice of the European Union[1] (CJEU) is one of the most active judicial bodies in the world, delivering over 26,000 judgements since its creation.[2] Its impact upon Europe has been deep and pervasive and it has influence over many different policy sectors.[3] As AG Maduro correctly identifies, the Court has engaged in systematic “majoritarian activisim”[4] in pursuance of judicial harmonisation. Moreover, the Court frequently takes a teleological approach to jurisprudence in order to achieve this objective, sometimes basing its decisions upon “the spirit” of the Treaties opposed to their literal wording.[5] The scope, motivations and approach of the Court have a compounded effect, making it incredibly potent. It is capable of creating highly creative (and sometimes unpredictable) case law which can affect a wide range of people in a broad variety of sectors. Such power has the potential to be both highly beneficial and highly damaging.

In light of this some scholars have questioned its legitimacy.[6] There is an inherent friction between Member States and the Court; as Craig and de Burcá highlight “each has locked itself into a system of review whose dynamics it cannot easily control”[7]. This is because the Court’s power of review stems from all 28 Member States who all have divergent opinions. Holding the Court to account is therefore very difficult. This poses a problem when one considers the uneasy relationship direct effect and primacy have with Member State sovereignty. However the biggest danger to the Court, and the important role it plays, is itself. As established, the stakes are very high and poor judicial decisions can have colossal ramifications.

In this article I will analyse the approach of the Court through the lens of the fundamental freedoms. I will highlight the different approaches taken in regards to free movement of goods and free movement of services and argue why the Court should follow its approach in the latter.

b. Free Movement of Goods

The bulk of the case law concerning free movement of goods can be found in relation to measures having equivalent effect to quantitative restrictions.[8] In this area the Court has repeatedly tied itself in knots and generally struggled to take a decisive approach.

In the seminal case of Dassonville[9] the scope of Article 34 TFEU was cast very wide, indeed its “potential breadth […]is striking”.[10] The Court held that “any measure capable of hindering, directly or indirectly, actually or potentially, intra-Community trade”[11] would fall within the scope of Article 34, and thus be prohibited. Case law has developed these principles, meaning that at its widest scope anything that could potentially interfere[12] with intra-Community trade, even indirectly,[13] could fall within the scope of Article 34. Evidently this was a step too far. When taken to extremes Dassonville could be used to challenge a plethora of national rules.[14] As the notorious Sunday trading cases[15] illustrate something had to be done.

Consequently, in the infamous decision in Keck, the Court found it “necessary to re-examine and clarify its case law on this matter”.[16] Some tactfully state that this is merely a refinement of the Dassonville test,[17] however as Weatherill bluntly puts it, the Court simply “changed its mind”.[18] The decision in Keck effectively created an exception for certain selling arrangements that applied equally to all measures in fact and in law. This was not completely unprecedented (drawing from academic commentary[19] and case law[20] for its inspiration) and neither was its aim undesirable.[21] In fact, the Commission was initially very positive, stating that “the Court has completed its case law”[22]as a result of the judgement.

Regardless, the decision has been very divisive. Barnard states the ruling received “brickbats and bouquets in almost equal measure”.[23] However it is important to note that the majority of said ‘bouquets’ were from Member States thankful for a curtailment of the previous law. The majority of academic opinion is critical of the case; several key problems arise from it. Firstly it purported to clarify the case law; however it said nothing about which previous cases it overruled. Secondly the distinction between product requirements and certain selling arrangements is extremely fine, a problem exacerbated by the concept of dynamic/static rules.[24] Finally, and most damaging, the concept was completely novel and signified a departure from the well-established test of distinctly applicable and indistinctly applicable measures.[25] This caused the Court a considerable headache.[26]

Thankfully the Court heeded this criticism[27] and altered[28] its decision in Keck, at least to an extent. In Commission v Italy (Trailers)[29] the Court reaffirmed another test, the market access test. It is debatable whether this is an overarching theme or merely another category of breach; however the overall result is relatively clear. If a measure fails the Keck test it will be considered automatically in breach of the market access test. If a measure passes the Keck test it will still have to pass the market access test independently. Therefore, irrespective of how a measure fares under the Keck test, it will always be considered in light of Commission v Italy (Trailers).[30] Put simply the Keck test is not as relevant as it once was, it is subsumed by Commission v. Italy. There are now three types of measures which will fall foul of Article 34, distinctly applicable measures, indistinctly applicable measures and measures which prevent access to the market.

The market access test, however, is not perfect; there is some uncertainty as to its scope, with criticism present well before Commission v Italy (Trailers).[31] In Leclerc-Siplec[32]AG Jacobs stated that such a test could risk encompassing too much national regulation (as with Dassonville) and that therefore a minimum threshold criterion should be established. This may be a feature of the test, as the Court did use the phrase “considerable influence”[33] in the ruling; however this has not yet been resolved. Barnard states[34] that this concept of a threshold is at odds with the de minimus rule found in cases such as Bluhme.[35] This ignores the huge variation in barriers to the market that can arise; therefore such a threshold remains useful.

Although the exact scope of Article 34 TFEU is now almost fully defined, it is clear that the method the Court used to get to this position is flawed. The scope of the test fluctuated wildly throughout the years and no one test was applied consistently. This has resulted in a very messy series of decisions. The law concerning free movement of goods is unnecessarily convoluted.

c. Free Movement of Services

The Courts approach in regards to free movement of services is much preferred over the approach outlined above. In contrast to the relatively straightforward cases in regards to goods[36] the Court faced the problem of defining exactly what a service was, particularly considering the vague wording in Article 57 TFEU.[37]

Despite this the Court took a purposive and consistent approach to the matter. For the purposes of Article 56 TFEU,[38] a service is a self-employed activity provided for remuneration on a temporary basis with a cross-border element. Even though the Court has cast the scope fairly wide, especially in regards to the definition of remuneration[39] and the cross border element[40] there has not been the problems encountered with free movement of goods. This is because the Court has considered its approach and has thus been consistent when applying it. By avoiding the excessively broad statements that are present in cases like Dassonville the Court removes the need for correction further down the line.

Furthermore in regards to which measures are caught by Article 56, the Court has again been consistent. It has not sought to apply different tests or experiment with new concepts; rather it has taken a structured approach. The measures falling within the scope of this provision mirror that of the free movement of goods, but without the entire Keck fiasco. Distinctly applicable measures[41], indistinctly applicable measures[42] and measures which prevent access to the market[43] are all caught by the provision.

Free movement of services is arguably much more complex than free movement of goods, due to the human element it inherently incorporates. This freedom affects not only the provision of services, but those who deliver them. Consequently the stakes are much higher; any alteration to this framework will have an impact upon the flow of citizens between Member States. However due to the Court’s consistent and restrained approach it has managed to pursue the overall aim of a free market[44] without any of the complications encountered above.

d. Conclusions

It is evident that the Court is an extremely powerful and influential institution of the EU; it has the power to shape events across many countries. Considering this, and the inherent friction such an institution has with Member States, it is of utmost importance that the Court’s decisions are of the highest standard. It has been evidenced that the Court can err, especially when determining the scope of Treaty provisions and choosing which principle to apply. However it has also been shown that the Court can operate in a consistent and purposive manner, ensuring that the aims of the EU are carried out through case law. This is the approach that should be, and largely has been taken by the Court. However as the Court’s jurisdiction strays into more and more litigious areas, such as human rights and citizenship, it is crucial to remember the lessons learnt when developing the freedoms to ensure such mistakes are not made again.

[1] Hereafter referred to as the Court.

[2] ‘The Court in Figures’ (1 July 2013) <http://curia.europa.eu/jcms/jcms/P_80908/> accessed 20 January 2014

[3] Paul Craig and Gráinne de Búrca, The Evolution of EU Law (2nd Edition, 2011, OUP) [119]

[4] Communication from the Commission concerning the consequences of the judgment

given by the Court of Justice on 20 February 1979 in Case 120/78 (‘Cassis de Dijon’)

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:1980:256:0002:0003:EN:PDF

[5] C-26/62 Van Gend en Loos (1963) ECR I [12]

[6] Giandomenico Majone, ‘Two logics of delegation, agency and fiduciary relations in EU governance’ [2001] EUP 2(1) 103

[7] Craig and Gráinne de Búrca, The Evolution of EU Law (2nd Edition, 2011, OUP) [127]

[8] Consolidated Version of the Treaty on the Functioning of the European Union (2012) OJ C 326, Article 34

[9] C-8/74 Procurer de Roi v Dassonville [1974] ECR 837

[10] Catherine Barnard, The Substantive Law of the EU (3rd Edition, 2010, OUP) [73]

[11] C-8/74 Procurer de Roi v Dassonville [1974] ECR 837 [5]

[12] C-184/96 Comission v France (Foie Gras) [1998] ECR I-6197

[13] C-120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein [1979] ECR 649

[14] Craig and Gráinne de Búrca, The Evolution of EU Law (2nd Edition, 2011, OUP) [74]

[15] Torfaen Borough Council v B & Q plc [1989] ECR 3851

[16] C-267 & 268/91 Keck and Mithouard [1993] ECR I-6097 [14]

[17] Craig and Gráinne de Búrca, The Evolution of EU Law (2nd Edition, 2011, OUP) [74]

[18] Stephen Weatherill, Cases and Materials on EU Law (10th Edition, 2012, OUP) [328]

[19]Eric White, ‘In Search Of The Limits To Article 30 Of The EEC Treaty’ (1989) 26 CMLR 2 235

[20] C-292/92, Hünermund [1993] ECR I-6787

[21] Craig and Gráinne de Búrca, The Evolution of EU Law (2nd Edition, 2011, OUP) [665]

[22] [1993] OJ C353/6 [22]

[23] Catherine Barnard, The Substantive Law of the EU (3rd Edition, 2010, OUP) [126]

[24] Eric White, ‘In Search Of The Limits To Article 30 Of The EEC Treaty’ (1989) 26 CMLR 2 235

[25] Craig and Gráinne de Búrca, The Evolution of EU Law (2nd Edition, 2011, OUP) [661]

[26] C-405/98, Konsumentenombudsmannen v Gourmet International Products AB [2001] ECR I-1795

[27] Craig and Gráinne de Búrca, The Evolution of EU Law (2nd Edition, 2011, OUP) [667]

[28] ibid 141

[29] C -110/05 Commission v. Italy (Trailers) [2009] ECR I-519

[30] ibid

[31] ibid

[32] C-412/93 Leclerc-Siplec [1995] ECR I-179 [41] [49]

[33] C -110/05 Commission v. Italy (Trailers) [2009] ECR I-519 [2]

[34] Catherine Barnard, The Substantive Law of the EU (3rd Edition, 2010, OUP) [106]

[35] C-67/97 Bluhme [1998] ECR I-8033

[36] C-97/98 Jägerskiöld [1999] ECR I-7319

[37] Consolidated Version of the Treaty on the Functioning of the European Union (2012) OJ C 326, Article 57

[38] Consolidated Version of the Treaty on the Functioning of the European Union (2012) OJ C 326, Article 56

[39] C-51/96 & C191/97 Deliège [2000] ECR I-2549

[40] C-157/99 Peerbooms [2001] ECR I-5473, C-384/93 Alpine Investments [1995] I-1141

[41] C-288/89 Gouda [1991] ECR I-4007

[42] C-18/87 Commission v Germany [1988] ECR I-5427

[43] C-384/93 Alpine Investments [1995] I-1141

[44] Consolidated Version of the Treaty on European Union (2012) OJ C 326, Article 3(3)

Keck vs. Trailers: have certain selling arrangements been towed away?

Amanda Spalding

PhD Candidate at King’s College London

In the 1990s the European Court of Justice (ECJ) established a distinction between the product requirements and certain selling arrangements in the case of Keck and Mithouard.[1] A few years ago in Trailers[2] the ECJ declined to extend Keck to user arrangements and declared that a measure will be classified as a measure having equivalent effect to a quantitative restriction if it hinders access to the market. Though Keck has not been specifically overruled does this market access test mean that Keck has been abandoned? This post will examine whether the market access test has indeed overtaken the Keck certain selling arrangements exception or whether the tests actually deal with separate situations. There is an argument that the phrasing used in Trailers actually excluded product requirements and certain selling arrangements from the market access test.[3] It is also possible that the market access test only applies when the measure is discriminatory whereas certain selling arrangements only apply to indiscriminate measures.[4] These arguments will be explained and critiqued here.

Pre-Keck

Before jumping straight into the Keck case it is necessary to give a bit of background as to why it was decided. As is well known, in the case of Dassonville[5] the ECJ defined a measure having equivalent effect to a quantitative restriction (MEQR) as ‘all trading rules enacted by member states which are capable of hindering directly or indirectly, actually or potentially intra-community trade.’ This is a very wide definition and a trend started with opponents of regulation attacking national rules in view of EU law compliance. Thus Member State competence to impose any regulation was severely limited. A good example of this is the Sunday Trading case law which challenged the limits on Sunday trading hours imposed in the UK.[6] Eventually the ECJ declared that these rules could be justified by socio-cultural reasons but by that point the UK Parliament was already under huge pressure to change the law.

The Keck Case

The Keck case concerned traders selling goods at a loss which contravened French law. The traders argued that this prohibition restricted a method of sale promotion and so was a MEQR. The ECJ noted ‘the increasing tendency of traders to challenge national rules’ and drew a distinction between product requirements and certain selling arrangements (CSAs). Product requirements would always fall within the scope of EU law and have to be justified but CSAs. So long as the CSAs applied equally to all traders in the national territory and had the same effect on all traders in law and in fact, fell outside the scope of the Treaty. This French prohibition was a CSA and so was not prohibited under EU law. The Keck case was applied again in Leclerc-Siplec[7] where the TV advertising of fuel distributors was prohibited and was found to be a CSA. After that Keck was not successfully used again in front of the ECJ[8] but more recently a body of case-law concerning ‘user arrangements’ came before the ECJ – where these certain selling arrangements?

User Arrangements

In the Trailers case an Italian rule prohibited motorcycles, mopeds, bicycles etc. from pulling trailers thus there was effectively a ban on a certain type of trailer. The ECJ found that the rule did not discriminate with regard to origin but in fact only imports were affected as no trailers were manufactured in Italy. The ECJ identified three situations where a rule could be regarded a MEQR.

Where the object/effect of the measure is to treat products from other member states less favourably than domestic products.
When a measure requires goods lawfully made in another member state to meet another condition even if it applies to all products indiscriminately.
Any other measure which hinders the access of products originating in other member states to the market.

The third situation applied here as the prohibition on the use of the product would have a big impact on consumer behaviour which will affect demand for the product. However this could be justified under the mandatory requirement of road safety.

A second user arrangement case emerged soon after. In Mickelsson and Roos[9] two people were caught riding jet skis on a body of water where the use of watercraft is prohibited by Swedish law. The ECJ did not even refer to Keck but went straight to the definition of a MEQR provided in the Trailers case. It found such a limitation would hinder access to the market as it would deter consumers from buying the product but it could be justified on the grounds of the protection of health and life of plants and animals and environmental protection.

Market Access vs. Keck

Though Keck has not been specifically overruled, has it been abandoned in favour of a market access test? Perhaps not as there is an argument that the phrasing used in Trailers exempts CSAs from the market access test.[10] The ECJ reiterates that discriminatory measures and product requirements are always prohibited by Article 34 and that CSAs are only prohibited in so far as they are discriminatory. Then the ECJ states ‘Any other measure which hinders the access of products originating in other Member States to the market of a Member State is also covered by that concept [MEQR]’ The phrase ‘any other measure’ is confusing, since it is not clear whether it refers to the a measure which is not a discriminatory measure, a product requirement or a CSA? Or does it refer to any non-discriminatory measure – including CSAs?

If it is the former situation, then the market access test may be said to apply to residual rules. Residual rules are those rules which cannot be classed as a product requirement nor can they be considered product requirements but which affect the sale of a product. Some examples are a requirement to report data, restrictions on the transport of the product and indeed prohibitions on the use of the product. However this reading of the judgement is not without its problems. The most prominent being that, given the nature of residual rules, it does not make much sense in the internal market. Why would the court exclude CSAs from the market access test when they are likely to have bigger impact on the sale of the product than a residual rule? CSAs govern where, when, how and to whom the product may be sold – factors far more likely to affect trade than a requirement to provide data. There is also a potential for overlap between CSAs and residual rules, for example a requirement not to sell cigarettes to under-18s would be both a CSA (to whom) and a residual rule (prohibition on use).

Another argument which suggests that Keck has not been abandoned is the idea that the market access test only applies when a measure is discriminatory.[11] In order for a CSA not to be caught by Article 34 TFEU it must fall equally on all traders in the national territory and affect the same in law and in fact – in other words it must not be discriminatory. If a measure is not discriminatory because it affects all traders equally then it surely follows that there is no market access problem. Any trader trying to break into the market faces the same obstacles as any other. This is a more convincing reading. Although this argument does not seem to stand up against the ECJ case law, a prohibition on trailers for mopeds, for example, would affect any company attempting to start such a business in Italy as well as those from other Member States. In other words it fell equally on all traders but there were simply no traders from Italy. Thus the discrimination distinction seems also to be problematic.

Conclusion

Has Keck been abandoned then? Maybe seems to be the only possible answer. This whole area of EU law has been encased in uncertainty for a long time. The refusal of the ECJ to clear up the situation seems bizarre given the obvious potential consequences for both member states and traders. The two explanations outlined above are not without their problems but their adoption by the ECJ would not be all that surprising. It would not be the first time the Court has engaged in strange and contradictory logic.[12] Until the Court chooses to clarify the situation however, traders and Member States will have to deal with the legal uncertainty.

[1] Case 267 and 268/91 [1993] ECR I-6097

[2] Case C-110/05 Commission v Italy [2009] ECR I-519

[3] E. Spaventa, ‘Leaving Keck behind? The free movement of goods after the rulings in Commission v. Italy and Mickelsson and Roos’’, (2009) 34 ELRev. 914

[4] G. Davies, ‘Understanding market access: Exploring the economic rationality of different conceptions of free movement law’, (2010) 11 GLJ 671

[5] Case 8/74 [1974] ECR 837

[6] Case 145/88 Torfaen Borough Council v B&Q plc ECR 3851, Case 169/91 Stoke-on-Trent City Council v B&Q plc ECR 6635

[7] Case 412/93 ECR I-179

[8] Although there is an argument that there are ‘hidden uses’ of Keck in ECJ cases Case 384/93 Alpine Investment ECR I-1141; Case 51/96 Christelle Deliege ECR I-2549; Case 544/03 Mobistar ECR I-7723 but this is outside the scope of this paper.

[9] Case 142/05 [2009] ECR I-4273

[10] For the full argument and rebuttal see E. Spaventa, ‘Leaving Keck behind? The free movement of goods after the rulings in Commission v. Italy and Mickelsson and Roos’’, (2009) 34 ELRev. 914

[11] For the full argument see G. Davies, ‘Understanding market access: Exploring the economic rationality of different conceptions of free movement law’, (2010) 11 GLJ 671

[12] Case 137/09 Josemans [2010] ECR I – 13019

Interchange Transaction Fees: Moving Toward Increased Standardisation and Governmental Regulation

Robert Miklós Babirad

1. Introduction

Credit and debit card interchange transaction fees have been subject to increasing governmental regulation and review both within the EU and abroad. This article will begin with a brief overview of interchange transaction fees as well as the arguments both in favour of and against their stricter regulation by governmental authorities. The proposed EU level regulation for interchange fees will also be considered contextually with regard to a parallel trendoccurringin the United States, which appears to follow a similar methodology to that being pursued by the European Union in this area.

In conclusion, it will be suggested that the European Union is engaging in a beneficial move toward increased and stricter governmental regulation of interchange transaction fees with the overall objective of promoting consumer welfare, increasing product price transparency and inhibiting anti-competitive conduct within this field.

2. The Controversial Nature of Interchange Fees

In accordance with EU regulation, a fee paid between the consumer’s payment service provider and that of the merchant, which has been multilaterally agreed upon (although bilateral agreements may also occur), constitutes a multilateral interchange fee.[1] Under the U.S. Durbin Amendment, interchange transaction fees are defined as “any fee established, charged or received by a payment card network for the purpose of compensating an issuer for its involvement in an electronic debit transaction.”[2] Interchange fees are paid per transaction by the bank of the retailer to the bank of the consumer where a payment card is used (the reversal of this payment sequence may also occur).[3] Additionally, interchange fees are paid for by consumers as part of the cost of their purchase of goods and higher interchange fees have the potential to subsequently result in greater product costs.[4]

The issue of increased governmental regulation of interchange fees has both supporters and opponents, because these fees have a significant impact on various parties and interests connected with a transaction. The interesting nature of interchange fees stem from the fact that the costs as well as the corresponding benefits received by both an issuer and acquirer of a particular payment card are directly associated with the interchange fee that has been established.[5] Therefore, various parties are impacted by the interchange fee rate as well as the type of payment card that is being employed by the consumer. It is also important to note that the predominant source of revenue derived by a credit card company, where a consumer is not otherwise liable for other finance costs associated with the use of their payment card, stems from the interchange fee.[6]

A difficulty associated with interchange fees is that they are for the most part not readily noticeable by the consumer while generally constituting the greatest part of the fee being paid in connection with their purchase.[7] Additionally, the use by cardholders of payment cards that produce higher fees is encouraged.[8] Companies issuing payment cards also compete with each other by offering greater interchange fees in order to “attract issuing banks” to their particular card, thereby also resulting in increased merchant costs, which are passed on to consumers.[9]

An argument in favour of the need for greater standardisation and governmental regulation is that interchange fees being collectively established; possess the possibility of constituting anticompetitive conduct.[10] Increased regulation of interchange fees has the potential to remove hidden costs not readily visible to the consumer and to require retailers to compete against each other on price costs for retail goods that reflect greater transparency.[11]Lower interchange fee charges and increased regulation also possess the positive potential of encouraging banks to issue the cards of new payment schemes such as those emerging in the field of mobile payments.[12]

Enhanced governmental regulation and enforcement of interchange transaction fees are necessary, because without such a system in place, these fees have the potential to be used as a bargaining instrument between banks and card issuing companies who may compete to increase their own respective profits exponentially, but without making equal provision for consumers to also derive corresponding benefits.

The relatively “hidden” nature of these fees is also troublesome, because of their ability to negatively impact consumers, who may not otherwise be aware that an increase in the price of the goods that they purchase, is directly related to the bargaining occurring between banks and card issuing companies with regard to the setting of interchange fee transaction rates. A limited or unregulated situation with regard to these fees has the ability to work to the severe detriment of consumers.

The lack of an EU level regulation also creates increased disparities where each Member State is individually legislating with regard to the establishing of interchange transaction fees. Interchange fee rates will vary between Member States as well as the degree of effective enforcement available against their abusive use by banks and card issuing companies, which may seek to attain maximum profits at the expense of consumers. Additionally, consumers within the European Union may only have the opportunity to fully benefit from the potential benefits otherwise available to them by purchasing within the Single Market, through the establishment of an EU wide regulation, which standardises interchange transaction fees and provides a uniform set of expectations and guidelines that prevent these fees from being exploited by private interests.

3. Present Situation in the EU

The European Union does not presently have a direct legislative framework in place for the regulation of interchange transaction fees.[13] The issue has been addressed by the Member States by adopting legislation and enforcement through judicial proceedings by national competition authorities, but this has also led to the creation of disparities with regard to interchange transaction fee regulation throughout the Single Market.[14] The proposed regulation will fill an existing gap in the legislation, which is currently in place relating to payment services, but which fails to address the need for a system that standardises interchange transaction fees throughout the European Union.[15]

Presently, the Payment Services Directive[16] operates with the objective of providing conditions and consumer rights for payment services on an EU-wide basis and provides for a standardised structure concerning payments throughout the Single Market.[17] Additional regulations have also been enacted, which complement this provision, but none which directly address the standardisation of interchange transaction fees on an EU-wide level.[18]

Enforcement in the market concerning card payments has also occurred through judicial proceedings related to competition law enforcement by both national competition authorities as well as the European Commission.[19] The General Court’s judgment in MasterCard, Inc. and Others v European Commission[20] stated that competition is restricted by multilateral interchange fees, consumers do not derive benefits from these fees and card acceptance costs are subsequently increased through their application.[21]Visa and MasterCard have also submitted commitments to the Commission with regard toreducing multilateral interchange fee charges concerning both domestic as well as transactions that cross Member State borders.[22] However, even these commitments combined with the existing Payment Services Directive are insufficient for the providing of an effective and uniform EU-wide system for the standardisation and effective regulation of interchange transaction fees.

An argument in favour of greater regulation within the European Union is that without such regulation being effected at the EU level, disparities in interchange rates between Member States will continue to hinder competition, the market entry of a greater variety of payment service providers will be restricted, higher consumer prices will result, and an overall reduction will occur in the EU consumer’s ability to otherwise benefit from the advantages of the Single Market.[23] A trend toward greater governmental regulation and standardisation of interchange fees both within the EU and abroad has necessarily developed in this field in an effort to inhibit anticompetitive conduct while increasing transparency and promoting increased consumer welfare.

4. The EU’s Proposed Regulation for Interchange Fees

On July 24, 2013, the European Commission put forth a Proposal for a Regulation of The European Parliament and of The Council on interchange fees for card-based payment transactions.[24] The proposed EU regulation aims at greater governmental regulation by standardising and capping multilateral interchange fees throughout the European Union.[25] The cap would be applied to both consumer credit as well as debit cards and be set at 0.3% of a transaction for credit cards and at 0.2% for debit cards.[26] An interesting aspect of the proposed regulation is that merchants will be able to levy a surcharge or decline acceptance of cards, which fail to have regulated interchange fees.[27]

Mr. Almunia argues for the necessity of the proposed EU level regulation, because only greater transparency and the regulating of interchange fees will prevent consumers from otherwise continuing to pay higher prices for retail goods, whose costs are a direct product of inflated and hidden interchange fees, which constitute a portion of the product’s final price.[28]

New forms of payment services will also be provided with enhanced regulation under the decision of the Commission to adopt Payment Services Directive Two.[29] This will have a particular impact in the area of e-commerce and provide for a more “level playing field” between differing providers of payment services.[30] The overall EU trend appears to be toward increased standardisation and regulation of interchange fees at the EU rather than Member State level resulting in enhanced cost transparency and lower interchange fees for consumers throughout the European Union. Payment methods, which fail to operate under these regulations, will be at a disadvantage and as a result consumers will be better informed of the actual charges that make up the final cost of the goods, which they purchase.

5. A Parallel U.S. Move Toward Stricter Governmental Regulation of Interchange Fees?

The United States appears to be following a similar trajectory to that of the European Union with regard to providing for enhanced standardisation and stricter governmental regulation of interchange transaction fees. In the recent and controversial July 2013 case of NACS v Board of Governors,[31] a U.S. District Court held that the Federal Reserve Board had “clearly disregarded Congress’s statutory intent” in its interpretation of the Durbin Amendment[32] by “inappropriately inflating all debit card transaction fees by billions of dollars” while not providing multiple networks for each transaction involving a debit card, which would be unaffiliated.[33] The Court held that the Durbin Amendment did not enable the Federal Reserve Board to consider, in setting the standard for interchange fees, “any costs, other than variable ACS costs incurred by the issuer in processing each debit transaction.”[34] The Court also stated that the Federal Reserve Board was not empowered by Congress to “make policy judgments” with the result of increased interchange rates for consumers.[35]

The Court’s approach is that of a stricter and narrower interpretation of the Durbin Amendment’s standards for the promulgation of regulations by the U.S. Federal Reserve Board with regard to the setting of interchange transaction fees. A broad interpretation of the interchange fee standard and the inclusion of policy considerations being accounted for in determining this standard was not supported by the Court and this appears to be reflective of a parallel policy approach to that which is being pursued by the EU with regard to its respective call for the stricter regulation and standardisation of interchange transaction fees.

6. Conclusion

Enhanced governmental regulation of interchange fees has the potential to result in the removal of hidden costs, lower interchange fees and increase competition that will be to a greater degree transparent. Additionally, the development of new payment schemes will be encouraged and consumers will benefit from lower product prices as well as being able to take advantage of the benefits of the Single Market through the common standardisation of interchange fees.

Critics of the proposed regulation argue that restrictions on the amount that may be charged as an interchange fee will result in an increase in cardholder fees while there will be no subsequent reduction with regard to the prices charged for retail goods.[36] The counter argument is that this criticism will not be supported, because competition between banks will occur on the basis of visible cardholder fees as a result of an EU-wide regulation rather than on hidden interchange transaction fees.[37]

An additional argument by payment card companies and banks is that increased standardisation and governmental regulation of interchange fees will prevent these entities from being able to generate a profit or to recover their respective expenditures.[38] Although this does not appear to be a sustainable argument, the validity of this claim will in actuality only be known after the regulation comes into effect. The Commission anticipates agreement on the proposal by both the European Parliament and the Lithuanian Presidency to occur in the Spring of 2014.[39]

[1]Payment Services Directive and Interchange Fees Regulation: Frequently Asked Questions, Memo/13/719, 24 July 2013, p. 7.

<http://europa.eu/rapid/press-release_MEMO-13-719_en.htm> Accessed 9^th of October 2013.

[2] Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Pub. L. No. 111-203, 124 Stat. 1376-2223 (2010), § 1693o-2(c)(8).

[3]Frequently Asked Questions, p. 7.

[4] Ibid. at p. 5.

[5]Chang, Howard H., and David S. Evans. “The competitive effects of the collective setting of interchange fees by payment card systems.” Antitrust Bulletin Fall 2000: 641. LegalTrac. Web. 9 Oct. 2013, p. 653.

[6] Ibid.

[7]Farrell, Lisa. “A step in the right direction: regulation of debit card interchange fees in the Durbin Amendment.” Lewis & Clark Law Review Winter 2011: 1077-1106. LegalTrac. Web. 9 Oct. 2013, p. 1083.

[8]Frequently Asked Questions, p. 3.

[9] Ibid.

[10] Chang, p. 654.

[11]Almunia, J, Introductory Remarks on Proposal for Regulation on Interchange Fees for Cards, Internet and Mobile Payments, Speech/13/660, 24 July 2013, p. 2.

<http://europa.eu/rapid/press-release_SPEECH-13-660_en.htm> Accessed 9^th of October 2013.

[12] Ibid. at p. 3.

[13]Commission Proposal for a Regulation of the European Parliament and of the Council on interchange fees for card-based payment transactions COM (2013) 550/3, p. 4.

<http://ec.europa.eu/internal_market/payments/docs/framework/130724_proposal-regulation-mifs_en.pdf> Accessed 28^th of October 2013.

[14]Ibid.

[15]Ibid.

[16] European Parliament and Council Directive 2007/64/EC on payment services in the internal market OJ 2007 L 319/1.

<http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:319:0001:0036:EN:PDF> Accessed 28^th of October 2013.

[17]Commission Proposal, p. 4.

[18] See Ibid.

[19]Commission Proposal, p. 4.

[20]Case T-111/08 MasterCard, Inc. and Others v European Commission [2012].

[21]Commission Proposal, p. 4.

[22]Ibid. at p. 5.

[23]Frequently Asked Questions, p. 5.

[24]Commission Proposal for a Regulation of the European Parliament and of the Council on interchange fees for card-based payment transactions COM (2013) 550/3.

<http://ec.europa.eu/internal_market/payments/docs/framework/130724_proposal-regulation-mifs_en.pdf> Accessed 28^th of October 2013.

[25]Almunia, p. 2.

[26] Ibid.

[27] Ibid.

[28] Ibid.

[29]Frequently Asked Questions, p. 1.

[30] Ibid.

[31]NACS v Board of Governors of The Federal Reserve System (D.D.C. Jul. 31, 2013) (Loislaw Federal District Court Opinions).

[32] See Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Pub. L. No. 111-203, 124 Stat. 1376-2223 (2010).

[33]NACS v Board of Governors, pps. 1-2.

[34] Ibid. at p. 33.

[35] Ibid. at p. 46.

[36]Almunia, p. 2.

[37]Ibid.

[38] Farrell, p. 1079.

[39]Frequently Asked Questions, p. 6.