Call for Papers – 2013: European Year of the Citizen

*** REMINDER: WE ARE ONLY LOOKING FOR ABSTRACTS WITH A STRONG FOCUS ON EUROPEAN LAW AND ARE UNABLE TO ACCEPT ANYTHING WITHOUT THIS EUROPEAN LINK***

 

KSLR European Law Blog hereby invites you to submit abstracts on the topic of “2013: European Year of the Citizen”

 

A ringing declaration from the EU institutions heralded 2013 as European “Year of the Citizen”, instigating debate suited to our call for papers. The KSLR European Law Blog is interested in hearing what the general public have to say regarding this topic, in all fields ONLY RELATED TO EU LAW and from all European perspectives. This would include whether the declaration is to be commended, if there have been steps to retain its promises and your opinions as to the choice of European “Year of the Citizen” in the current European atmosphere. Articles on changing EU environmental law, EU consumer protection, EU competition, EU human rights, EU company law, EU criminal and immigration law as well as other topics influencing EU citizens’ rights in a broad sense are welcome.

 

The articles resulting from selected abstracts will be posted on KSLR European Law Blog website.

 

Please submit abstracts of no more than 250 words by 15 March 2013 to agne.limante@kcl.ac.uk and/or adrienne.yong@kcl.ac.uk and direct any questions to those emails too.

 

Authors of selected abstracts will be informed by 1 April 2013. A full paper (1,500 to 2,000 words) should be submitted before 1 May 2013. The style guidelines may be found here.

 

The call for papers is open to submissions from students and professionals from the UK and abroad but we are only accepting submissions with a strong focus on European Union law.

 

KSLR EU Law Blog is a blog run by the students of the King’s College London and forms a part of the KCL Student Law Review. The blog is an informal academic forum in which law students and professionals express their opinions on EU law issues and are informed about recent developments in EU law. You can like us on Facebook or follow us on Twitter @EUKSLR

EU Competition Policy’s Broad Application

 

Robert Miklós Babirad

 

1          Introduction

On October 18, 2012, Mr. Joaquín Almunia, Vice President of the European Commission responsible for Competition Policy delivered a speech entitled “Competition Enforcement in the EU: Beyond the Integration of Markets”[1] at the twentieth anniversary of the Academy of European Law.  Mr. Almunia’s speech reflects the important idea that EU competition policy has a broad application and impact on the EU’s citizenry.  Additionally, the scope of EU competition policy necessarily extends beyond furthering development of the Single Market and economic efficiency objectives.  It may be argued that a broad and diverse application of EU competition policy, which is not limited solely in its employment to increasing economic efficiency, will lead to greater diversity and abundance of derived benefits for all EU citizens as well as furthering the Union’s development as a whole.  A key example of an expanded application for competition policy provided by the speech is that of its use as a tool for effectively responding to the present financial crisis.[2]

 

This article will begin by briefly discussing the debate concerning the role of competition policy.  EU competition policy as a unique tool, which differs from that which may be available in other competition systems will then be discussed.  The views set forth in Mr. Almunia’s speech concerning the historical, present and future application of EU competition policy will be offered.  The article will conclude by suggesting that Mr. Almunia’s speech demonstrates the continued importance and need for competition policy to be applied in context and its necessity as an instrument with broad application for enhancing the welfare of all EU citizens.  It will also be argued that placing competition policy in the greater context of the Union’s goals as a whole, and affording competition policy the opportunity to be an instrument responsive to its societal context, is preferable over an approach that is solely concerned with generating economic efficiency.

 

2          The Role of EU Competition Policy

 It is interesting to read Mr. Almunia’s speech in the context of the debate over the “correct” role for EU competition policy.  The majority of global competition law systems presently consider the enhancing of economic efficacy to be their primary goal.[3]  Objectives related to public policy have diminished as an important consideration in these systems.[4]  The U.S. antitrust model provides an example of this approach where all effective discourse must be presented in terms of economics and no provision is made for successful, non-economic, policy related arguments.[5]  A solely economic approach would not be effective under the EU system, because different societal values including that of the Single Market, as well as the attendant policy considerations of the Treaties are at stake.

 

The alternative and perhaps more helpful viewpoint, particularly with regard to the EU, is that competition policy should apply broadly and also promote a nation’s policy objectives, or in this case those of the Union as a whole, objectives which may not be related solely to increasing economic efficiency.[6]  However, the European Commission is restricting the consideration of policy objectives within EU competition policy.[7]  Mr. Almunia notes in his speech that one important change has been a trend toward an approach that is to a greater degree economically oriented and this is reflected in the regulations for block exemptions and establishment of guidelines relating to policy in varying fields.[8]

 

Dr. Townley states that competition policy is “not an end in itself,” but is rather more appropriately employed as a tool for achieving the objectives set forth in the Treaties.[9]  Additionally, the EU competition provisions do not operate independently and it is preferable to view them instead as “part of a web of inter-related Treaty articles.”[10]  The EU Treaties and their embedded objectives provide the context in which competition policy must be interpreted.[11]  Mr. Almunia’s speech also indirectly alludes to this contextual approach for EU competition policy, but stops short of directly calling for the greater incorporation of policy under the competition provisions.  It is this contextual approach, which appears to be of the greatest helpfulness if EU competition policy is to be used as an effective tool for promoting the values of the Treaty as well as those of the EU and its citizens as a whole.

 

An example of the Commission’s limitation on considering objectives other than economic efficiency under EU competition policy is demonstrated by its statement that the objective of Article 101 TFEU (previously Art. 81 EC) is to protect competitive conditions on the Single Market with the goal of promoting consumer welfare as well as the allocation of resources in an efficient manner.[12] Goals relating to policy expressed in the Treaties, may only be considered under Article 101 TFEU if they fall within the limited conditions of Article 101(3) TFEU.[13]  However, it has also been argued that Article 101(3)’s conditions for exemption of otherwise prohibited agreements are not necessarily meant for the incorporation of policy, but are rather “economic efficiency” considerations.[14]

 

It may be argued that EU competition policy has necessarily gone beyond the role of considering solely economic efficiency and must continue to do so moving forward.  The need for its broad application as a tool not only for creating economic efficiency, but also as a contextually responsive instrument for responding to the present economic crisis appears to be evident.[15]  It is in this application that competition policy may have the greatest effect and benefit the largest number of individuals.

 

3          EU Competition Policy’s Unique Nature

Mr. Almunia’s speech demonstrates that EU competition policy differs from other competition law systems and therefore necessarily takes a different approach in its application.[16]  The European Commission, as a competition authority, is in a unique position, because its enforcement powers extend broadly to both bodies of a private as well as public nature.[17] It is important for both public and private actors to be made accountable to the competition rules and as such not only is competition increased, but greater consideration may be given to advancing the Treaty’s policy considerations with regard to both the public and private sector. Additionally, it is only through applying competition policy to both public and private actors that the Single Market and increased welfare of all EU citizens can become a functional reality.

 

Competition is safeguarded in the private sector by rules concerning antitrust, which seek to prevent the development of private restrictions to trade by businesses.[18]  Additionally, these rules operate with the objective of establishing equal operating conditions for businesses within the Single Market.[19]  In the public sector, rules concerning State aid inhibit governments from altering competitive conditions and ensure equality of opportunity in the ability of Member States to provide subsidies.[20]  The European Commission, because of its broad application of rules regulating competitive conditions is empowered with a “formidable tool,” which benefits both citizens of the EU as well as the Single Market as a whole.[21]  It is noted in the speech that neither other nations outside of the EU nor organisations operating at the international level have at their disposal the tools available within the EU competition system.   It is therefore important that these tools not be restricted by the establishment of a narrower application for EU competition policy. Additionally, a competition policy less insistent on policy will subsequently result in decreased societal benefits (namely, those advocated by the Treaties) that would have otherwise been available.

 

The application of EU competition policy is broader than that employed in most other jurisdictions and bases itself not only upon the unique situation of fostering development of a Single Market, but also upon the underlying idea of promoting the welfare of its citizens by monitoring competitive effects by both private as well as public actors.  The EU competition system’s broad application to both public as well as private actors thereby creates overall better conditions for the economy as well as its citizens than that which may occur under a more restricted interpretation.

 

 4          Application of EU Competition Policy

EU competition policy has traditionally embodied and continues to take on a broad role, not limited solely to creating economic efficiency in its application or corresponding benefits.  This is reflected by Mr. Almunia’s speech.  It appears that this is the most helpful approach and most in line with the goals of the Treaty, which necessitate the consideration of policy in applying the competition rules.[22]  The Single Market can only be effectively integrated if competition policy applies broadly, not only to public and private actors, but also through its application as an instrument for advancing the Union’s larger policy objectives.

 

The application of competition policy may focus upon and be predominantly motivated by economic considerations, but its broad application and derived impact as well as benefits have suggested a much greater influence.  The suggestion is put forth that competition policy does not operate in an isolated manner, which would insulate it from the surrounding social and economic situation.[23]  The present social and economic situation since the onset of the global financial crisis is comprised by a lack of growth, an increase in unemployment, and an elevated public debt situation.[24]  Competition policy must not only operate in this difficult context, but has the responsibility to aid in the creation of growth that is sustainable while also assisting Europe in its ability to withdraw from the present crisis.[25]  This in itself recognises an extended role for competition policy beyond that of generating economic efficiency and is clearly reflective of the important and necessary role of policy considerations.  However, it is not clear from the speech as to how competition policy should proceed in this regard nor is it evident how the competition provisions should be applied as a tool for addressing the present financial crisis.

 

Policy concerns are being implicated and alluded to in Mr. Almunia’s speech, such as that of competition policy serving a contextual purpose and being employed as a tool for responding to the present financial crisis, but how this is to be done remains unclear.  However, competition policy necessarily emerges as a tool that is most productive if enabled to be responsive to its context, rather than one which is isolated and solely focused upon the attainment of economic efficiency at the exclusion of considering the Union’s policy related Treaty objectives.

 

Competition policy is an essential tool in Mr. Almunia’s view for the continued integration of the EU, but its role is not restricted to “the preservation of a level playing field” within the Single Market.[26]  The historical development of the EU’s unique competition policy regime as well as the support, which is offered by the Treaties and its accompanying policy objectives provide substantiation for this viewpoint.[27]  Mr. Almunia states, “[w]e all know that the call of Europe’s founding fathers for economic integration had a more profound and more noble motive.”[28]  Subsequently, it may be inferred that EU competition policy goes beyond protecting economic efficiency in its application and this is demonstrated by its role as an essential instrument for Europe’s institutional and political development.[29]  One is led to believe that policy considerations remain important in the application of competition policy, particularly if it is to be used as a tool for effective political and institutional construction.  However, one is left unsure as to whether an expanded role for policy is actually being advocated or whether Mr. Almunia’s remarks relate solely to economic efficiency.

 

Competition policy has also been used as an essential tool for development of the Single Market and the EU Courts’ manner of interpreting the competition provisions have occurred in a way that furthers integration.[30]  An example includes the EU Courts’ interpretation of concepts such as “effect on trade,” “concerted practices,” and the definition of an “undertaking” being afforded an interpretation that is generous and based upon the overriding policy interest of the Single Market’s development.[31]  As such, we see another example of competition policy being broadly applied.  It was traditionally necessary and continues to be essential for the EU Courts to follow this broad manner of interpretation if advancement of the Single Market is to be successful.

 

The importance of the relationship between competition policy and Europe’s public services is also noted.[32]  The public institutions of the community have the obligation of carrying out one of the most central tenets and fundamental values of the European model, that of providing for “certain social needs and public goods.”[33]  Mr. Almunia states that in looking at the field of public services in Europe, we are provided with “no better example to illustrate the link between competition controls and our fundamental values.”[34]  However, although a link is made between key European values and the competition provisions, the actual role of policy remains uncertain.  Policy is essential and must be considered to a greater degree in the application of the competition rules if there is to be such a link.  Applying competition policy to the provision of community public services clearly goes beyond the concern of generating economic efficiency.  It reflects important policy considerations, one example being that of Member States having the support of a competition law system, which assists in their ability to provide such services in a fair, effective, and cost efficient manner.  Unfortunately, the speech again stops short of directly supporting policy under the competition provisions.  However, the need for an expanded application of competition policy does appear to emerge as an important consideration in the continued development of the EU competition law system.

 

Competition policy has also assisted the Commission’s efforts to eliminate those existing obstacles, which may obstruct the development of unified European markets in areas as diverse as the telecommunications industry, the provision of postal services, railway networks, energy distribution and air travel with the goal of furthering the development of a single and unified EU marketplace.[35] Additionally, competition policy has made the principles of the free movement rules effective in practice.[36] It is essential for policy to be considered in applying competition policy broadly, particularly because of a propensity by the Commission and EU Courts to apply similar reasoning in their application of both the free movement and competition rules.[37] Unified markets and effective free movement rules are not only positive economically, but also foster a greater sense of European national, institutional and political unity, which are policy concerns.  The strengthening of the EU has in many ways been due to its competition policy and the broad application of that policy.[38]  The EU competition system has also delivered “practical benefits” to its citizens, because of its broad application and perhaps it may be argued that these have been derived, because of the recognition of policy and an application that has traditionally been contextually responsive.[39]

 

In the field of mergers, the EU Courts have afforded the Commission the ability to inquire into practices of an anticompetitive nature as well as mergers within the Single Market with the key requirement being merely that an impact upon the EU occurs even though a company may not have a physical headquarters within the European Union.[40]  EU competition policy has necessarily had a wide application and this is demonstrated by its application to foreign companies operating within the EU.  It is important that undertakings from outside of the Union are not provided with the opportunity to escape liability for actions, which lead to the distortion of competition on the Single Market, because of a narrow application of EU competition policy.

 

A unified and shared body of law that all EU citizens are able to rely upon has also been provided by the unique application and interpretation of EU competition policy.[41]  Legal precedents have applicability throughout Europe providing a common body of law for its citizens, businesses and national competition authorities.[42]  The competition rules are also universally applicable to all undertakings and it is possible for these rules to be invoked directly by citizens as well as businesses at the Member State level.[43]  Businesses are able to operate effectively and freely across Member States, because of competition policy and its enforcement against anti-competitive practices, which provides protection and universal applicability to companies throughout the European Union.[44]  A uniform body of law that applies throughout all of the Member States has economic, societal and political benefits and is possible, because of a broad and policy cognizant application of competition policy.

 

Mr. Almunia also states that in 2008 at the onset of the financial crisis, competition policy was employed as the only shared available device for confronting and preventing the collapse of the financial system in Europe.[45]  Government bail-outs were also controlled by the timely creation of a system concerning State aid and plans presently exist for a banking union’s future development.[46]  Additionally, State aid has been flexibly employed as an integral part of the EU’s competition policy.[47]  These actions clearly demonstrate the importance of a competition policy that is necessarily wide, contextually responsive, cognizant of policy, and subsequently varied in its scope, application and derived benefits.

 

5          Conclusion

The contributions of EU competition policy have improved the standard of living within Europe because of their broad application to a wide array of areas, resulting in the improved development of the Union’s structural, political and legal composition.[48]  EU competition policy should not be limited to solely attaining economic efficiency and now more than ever must be an instrument cognizant of greater European policy concerns.  Competition policy in the EU has not been traditionally restricted in its application or corresponding benefits to economics or the objective of advancing the Single Market, which may itself be looked upon as a predominantly economic concern.[49]  It continues to be important for EU competition policy to serve as a multipurpose instrument that is aware of its operating context and Treaty obligations, particularly if it is to be an effective tool for responding to the present financial crisis and the attainment of its timely resolution.

 

[1] Almunia, P, Competition Enforcement in the EU: Beyond the Integration of Markets, The citizen at the heart of EU law: 20th anniversary of the Academy of European Law (ERA) Trier, Speech /12/742, 18 October 2012.  <http://europa.eu/rapid/press-release_SPEECH-12-742_en.htm>  Accessed 12th of November 2012.

[2] See Almunia, p. 5.

[3] Townley, C. Article 81 EC and Public Policy (Hart Publishing, Oxford, 2009), p. 14.

[4] Ibid., p. 313.

[5] Monti, G. EC Competition Law (Cambridge University Press, New York, 2007), p. 79.

[6] Townley, p. 14.

[7] Ibid., p. 11.

[8] Almunia, p. 3.

[9] Townley, p. 314.

[10] Ibid., p. 48.

[11] Ibid.

[12] Commission Notice, Guidelines on the Application of Article 81(3) of the Treaty OJ 2004 C101/97, para. 13.

[13] Ibid., para. 42.

[14] Monti, p. 45.

[15] Almunia, p. 5.

[16] Ibid., p. 3.

[17] Ibid.

[18] Ibid.

[19] Ibid.

[20] Ibid.

[21] Ibid.

[22] See Townley, pps. 48-50.

[23] Almunia, p. 5.

[24] Ibid.

[25] Ibid.

[26] Ibid., p. 2.

[27] Ibid.

[28] Ibid.

[29] Ibid.

[30] Ibid., p. 4.

[31] Ibid.

[32] Ibid., p. 6.

[33] Ibid.

[34] Ibid.

[35] Ibid.

[36] Ibid., p. 4.

[37] Mortelmans, K. “Towards Convergence in the Application of the Rules on Free Movement?” (2001) 38 Common Market Law Review 613, pps. 613, 645-46.

[38] Almunia, p. 4.

[39] Ibid.

[40] Ibid., p. 4.

[41] Ibid.

[42] Ibid.

[43] Ibid.

[44] Ibid.

[45] Ibid., p. 5.

[46] Ibid.

[47] Ibid., p. 6.

[48] Ibid.

[49] See Commission, Article 81(3) Guidelines, para. 13.

‘(I Can Live) With or Without You’, the Opinion of Advocate General Bot in Joined Cases C-274/11 and C-295/11, Spain and Italy v Council, on the use of the enhanced co-operation procedure for the establishment of the EU patent system

Jose Manuel Panero Rivas

MA in Economics for Competition Law candidate, King’s College London, LL.M in European Law, College of Europe, Bruges

 

On 11 December 2012, Advocate General Bot delivered his opinion on Joined Cases C-274/11 (Spain v Council) and C-295/11 (Italy v Council).[i] Should the Court follow his reasoning, the case is likely to have a major impact on the enhanced co-operation procedure (hereinafter “the ECP”), allowing Member States a large room of manoeuvre to use the procedure. This is something which, by its very existence, is likely to erode the relevance of veto ‘rights’ in the limited fields where unanimity within the Council is still required.

In the next paragraphs we will: (i) briefly introduce the ECP; (ii) summarily explain the facts of the case and the applicants’ pleas, (iii) expose the conclusions of the AG and (iv) explain the relevance of the Opinion (should this be followed by the CJEU) in a broader context.

a)    Brief introduction to the ECP

As the well-instructed readers of this blog know, the ECP is regulated in both the TEU and the TFEU. On the one hand, Articles 20(1) and (2) the TEU read as follows:

‘1. Member States which wish to establish enhanced cooperation between themselves within the framework of the Union’s non-exclusive competences may make use of its institutions and exercise those competences by applying the relevant provisions of the Treaties, subject to the limits and in accordance with the detailed arrangements laid down in this Article and in Articles 326 to 334 of the Treaty on the Functioning of the European Union.

Enhanced cooperation shall aim to further the objectives of the Union, protect its interests and reinforce its integration process. Such cooperation shall be open at any time to all Member States, in accordance with Article 328 of the Treaty on the Functioning of the European Union.

2. The decision authorising enhanced cooperation shall be adopted by the Council as a last resort, when it has established that the objectives of such cooperation cannot be attained within a reasonable period by the Union as a whole, and provided that at least nine Member States participate in it. The Council shall act in accordance with the procedure laid down in Article 329 of the Treaty on the Functioning of the European Union.’

At their turn, Articles 326 to 334 TFEU establish in detail the procedure and limits for the use of the ECP.

The idea of establishing the ECP was to allow a group of Member States holding a sufficient “critical mass”, within the framework of the Treaties and without contravening them, to move forward in the integration process, leaving the door open for the remaining Member States to potentially join in the future.

Of course the possibility to resort to such action is not a “blank check” to Member States but it is subject to certain limits – some of them admittedly imprecise. The most relevant are:[ii]

i)     For an ECP to be allowed its outcome should respect the Treaties, in particular concerning the decisional procedure and the jurisdictional control.

ii)   The ECP should remain within the limits of competence of the Union, but not to refer to its exclusive competences.

iii)  The ECP should not hamper either the internal market or the economic and social cohesion.

iv)  The ECP should concern at least one third of EU Member States.

v)    The procedure should remain open to the rest of the EU Member States.

vi)  The decision to go through the ECP should be a “last resort” solution.

However, until now, these limits and their boundaries have been considered mainly by scholars. In the case at stake, the Court, as the supreme interpreter of the Treaties, has been invited to rule and set its doctrine on most of them.

b)   Context of the case and pleas of the Applicants

The adoption of the Regulation to establish an EU-wide intellectual property system[iii] has been a controversial subject in the Council meetings. One of the conflicting points has been the linguistic regime, for which a solution of compromise was advanced: the possibility to file patent applications in any language of the Union (establishing a mechanism for compensating translation costs) but granting the patent having unitary effect only in one of the official languages of the European Patent Office as provided by the European Patent Convention[iv] (hereinafter “EPC”) (namely, English, French or German). However, even this solution of compromise generated the opposition to the system (or, at least, the linguistic regime) of two countries: Italy and Spain.

Once the Council confirmed, after several attempts to reach an agreement, that no unanimity could be reached concerning the language arrangement, the Council started an ECP by means of its Decision of 10 March 2011[v] (“the contested Decision”).

Spain and Italy challenged the Decision under what AG Bot has classified as six pleas:[vi]

i)     The Council was not competent to establish an ECP as, the Applicants consider, the subject of the procedure concerns an exclusive competence of the Union (namely, the establishment of competition rules for the functioning of the internal market, mentioned in Article 3.1 b) TFEU). Accordingly, in adopting the contested Decision the Council infringed Article 20(1) TEU as an ECP can only be used in matters falling within the non-exclusive competencies of the Union;

ii)   The decision adopted by the Council would constitute a misuse of powers. The Applicants maintain that, contrary to Article 20 TEU, the true objective of the decision was not to integrate all Member States by means of multi-speed integration;

iii)  In adopting the contested Decision the Council failed to respect the judicial system of the Union by failing to specify in the contested Decision, the judicial regime envisaged for unitary patents matters;

iv)  In adopting the contest Decision the Council failed to fulfil the ‘last resort’ condition foreseen in in Article 20(2) TEU;

v)   An infringement of Articles 118 and 326 TFEU and Article 20(1) TEU insofar as the Decision undermined the internal market and economic, social and territorial cohesion, constitutes a barrier to and discrimination in trade between Member States and distorts competition between them;

vi)  The Decision failed to comply with Articles 327 and 328 TFEU insofar as (i) the Decision obliges Spain to waive its right under Article 65 of the EPC to require a translation of the patent specification into Spanish in order for it to produce legal effects in Spain; and (ii) the condition that ECP would be open to non-participating Member States laid down in Article 328 TFEU is not fulfilled, as the co-operation makes provision for a language regime Spain cannot accept. 

c)    The Opinion of the Advocate General

In his Opinion, AG Bot advised the CJEU to dismiss the actions of both Spain and Italy.

In his preliminary observations, AG Bot took the position that the review the Court should undertake of decisions establishing ECPs should be limited. He recalled AG Jacobs’ Opinion in Joined Cases C-248/95 and C-249/95[vii] in which he pointed out that such light-touch should be taken or else the Court would risk to “usurp the legislative role of the Council by imposing its own views of the economic policies to be pursued by the [Union]”.[viii]

In that regard, the AG pointed out that the choice of initiating the ECP is made by the Council, which grants authorisation on a proposal of the Commission and after obtaining the consent of the Parliament. In the context of that procedure, the institutions asses the effects of the ECP, weighting the different interests at stake and making political choices. It is in the light of those elements that the Council determines whether an ECP is the appropriate procedure to further the objectives of the Union, protect its interests and reinforce its integration. [ix]

Therefore, AG Bot advises the Court, in general, not to substitute the reasoning of those institutions by its own and confine itself to reviewing whether, in the exercise of the freedom conferred to the legislator, it has not committed a manifest error, misused its powers or manifestly exceeded the limits of its discretion.[x]

Entering into the specific pleas put forward by the contending parties, the AG advises the Court to dismiss all pleas on the following grounds:

i)     The first plea should be dismissed, as the issue does not relate to a matter where the Union has exclusive competences, but instead refers to the functioning of the internal market, which is a shared competence according to the loose wording of Article 4 TFEU.[xi] Specifically, the AG considers that “Since the Treaty of Lisbon Article 118 TFEU has supplied an appropriate legal basis for the creation of intellectual property rights and that provision refers expressly to the establishment and functioning of the internal market, an area which comes within the competence shared between the Union and the Member States.”[xii]

ii)   The second plea should be equally dismissed. Against the argument that the ECP should be considered, in this case, as a ‘solution of exclusion’, the AG is of the view that there was “no objective, relevant and consistent evidence which proves that the contested decision was adopted with the purpose of achieving an end other than stated or evading a procedure specifically prescribed by the Treaties”.[xiii]

iii)  Concerning the third plea, on the lack of establishment of a judicial regime in the Council decision, the AG notes that the authorisation given by the Council is merely an authorisation for the adoption of other legislative acts, which will then have to give specific effect to that ECP. Indeed, in the Council’s proposal for a Regulation implementing the ECP in the area of the creation of unitary patent protection, the question was addressed.[xiv]

iv)  As regards the fourth plea (on the anticipated use of what is a ‘last resort mechanism’), AG Bot notes the different attempts to move forward the mechanisms for the EU Patent system and the recurring conflicts, pointing out in any event the wide discretion that, in his view, should be given to the Council.

v)   On the fifth plea (negative impact of the proposal on the internal market and cohesion), the AG advised the Court to dismiss it, as the contested decision does not foresee the specific regime, which will only be defined (and challenged, if necessary) at a latest stage. In any event, the elements analysed by the AG point indeed to the opposite direction: the proposal does not hamper the internal market and/or cohesion, but goes in the benefit of those objectives.[xv]

vi)  On the sixth plea (concerning specific concerns on the compatibility of the linguistic regime with the EPC), the AG advice to refuse the plea as inadmissible insofar as the specific language arrangements were not part of the contested decision.

d)   Relevance for the specific case and for the future of the enhanced co-operation procedure

In parallel to the procedure before the CJEU, the creation of the EU patent system follows its own legislative course. Indeed, the same day the AG Opinion was delivered, the Parliament approved, in three separate voting sessions, the EU ‘Patent Package’ (integrated by the proposals for legislating on Unitary Patent, Language Regime and Unified Patent Court).[xvi]

However, the importance of the Opinion and the judgment goes well beyond the specific case. As mentioned above, and for the first time ever, the CJEU will have to rule on the legality of a decision authorising the use of the ECP. We will attend to the Court final judgment, but – at the risk of being completely wrong – it seems likely that the CJEU will follow its Advocate General.

The impact of a judgment dismissing the action would be quite relevant, and this is not purely of academic interest. Indeed, there is a major ECP on the horizon, the one concerning the establishment of the financial transaction tax, where all the previous conditions for the starting of the procedure seem to be in place.[xvii] The final ruling of the Court on this case is likely to affect the position of those Member States which would not opt for it (namely UK) as well as their chances of successfully blocking the ECP procedure. Of course, the circumstances of cases are always different, but it would not be surprising that, when drafting its final judgment in this case, the judges of the CJEU will consider the far-reaching consequences of their judgment in foreseeable ECP cases. We have to wait and see if the CJEU will act (again) as an ‘internal federator’ of the Union, and if its ruling will allow Member States to firmly say to reluctant partners whether they could live with or without them.

[i] Opinion of AG Bot in Joined Cases C 274/11 and C-295/11, Spain (C-274/11) and Italy (C-295/11) v Council, [2012] ECR n.y.r., available here: http://curia.europa.eu/juris/document/document.jsf?text=&docid=131666&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=1297429

[ii] See J.P. Jacqué, Droit institutionnel de l’Union européene, (6th ed.) 2010, Dalloz

[iii] Regulation of the European Parliament and of the Council implementing enhanced cooperation in the area of the creation of unitary patent protection (still not published in the OJ, status of the file available at http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2011/0093(COD)&l=en). See also Council regulation implementing enhanced cooperation in the area of the creation of unitary patent protection with regard to the applicable translation arrangements  (still not published in the OJ, status of the file available at http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2011/0094(CNS)&l=en ) as well as the Draft Agreement of the Council on a Unified Patent Court (latest version available at http://register.consilium.europa.eu/pdf/en/12/st16/st16222.en12.pdf)

[iv] Convention on the Grant of European Patents (European Patent Convention) of 5 October 1973 as revised by the Act revising Article 63 EPC of 17 December 1991 and the Act revising the EPC of 29 November 20001, available at http://documents.epo.org/projects/babylon/eponet.nsf/0/7bacb229e032863dc12577ec004ada98/$FILE/EPC_14th_edition.pdf

[v] Council Decision 2011/167/EU of 10 March 2011 authorising enhanced cooperation in the area of the creation of unitary patent protection, OJ 2011 L 76, p. 53

[vi] See paragraphs 20 to 25 of AG Bot Opinion

[vii] Opinion of AG Jacobs in Joined Cases C 248/95 and C-249/95 SAM Schiffart and Stapf [1997] ECR I-4475

[viii] See paragraph 27 of AG Bot Opinion and point 23 of AG Jacobs Opinion

[ix] See paragraph 28 of AG Bot Opinion

[x] See paragraph 29 of AG Bot Opinion

[xi] See paragraphs 31 to 67 of AG Bot Opinion

[xii] See paragraph 66 of AG Bot Opinion

[xiii] See paragraphs 68 to 91 of AG Bot Opinion

[xiv] See paragraphs 92 to 100 of AG Bot Opinion

[xv] See paragraphs 101 to 153 of AG Bot Opinion

Italian Golden Shares – a Never-Ending Story?

Jelena Ganza

PhD candidate, Dickson Poon School of Law, King’s College London

 

The obligation of sincere co-operation[i] of all Member States entails, inter alia, the national governments to comply with judgements of the Court of Justice of the European Union and adjust national measures accordingly. Timely and appropriate compliance initiatives would be seen as acting in good faith and in line with the sincere co-operation principle. Persistent non-compliance with judgements remains a problem and it particularly arises in cases where national governments’ influence over former strategic state-owned enterprises (SOEs), such as the largest Italian energy/oil company ENI, the former State telecommunication monopoly Telecom Italia and dominant electricity giant ENEL, is at stake.

This non-compliance stems from the basic conflict between the liberalisation aims of the Union and egoistic interests of certain Member States, which sought to retain influence over strategic industries by employing specific Control Enhancing Mechanisms called ‘golden shares’. Golden shares are the special class of shares introduced for the sole benefit of the ‘former owner’ – the State. These mechanisms aim at enhancing governmental control after privatisation, thus protecting important industries from turbulences of the free market. A typical golden share could have the following structure: where direct influence was lost due to privatisation, special powers, such as the power to veto the usage and disposal of strategic assets and the right to appoint directors, is attached to the golden shares held by the State.

These mechanisms are eagerly employed by States and ever so eagerly battled by European Commission and the Court. Golden shares are illegal, unless justified by overriding public interest and the necessity to protect public security, are legally certain, appropriate and non-discriminative.[ii] The justification criterion is narrow, however some governments were not only willing to face the Court, but were also determined to continue using already overruled golden shares post-judgement. Such tactics allow the matters to drag, contributing to a free-rider problem, which in turn means acting in bad faith and contrary to the principle of sincere co-operation, thus causing obstinate non-compliance and undermining the authority of the Court.

There are fifteen cases on golden shares in total and only in one of them they were justified.[iii] After the condemning judgement is passed, the State in question is obliged to comply without delay and either to severely restrict its golden shares or to repeal them altogether. Taking into account the success rate on justifying golden shares, it could be ascertained that following a condemning judgement the State in question is obliged not to try and amend but repeal them, since passing the justification test is a challenging task. Some States have disclosed a remarkable persistence in non-compliance alongside the determination to retain golden shares in spite of condemning judgements and looming sanction threats. Italy could be seen as one of such examples of persistent bad-faith compliance with four cases upon it, three of which relate to obstinate golden share Decree-Law 332/1994.[iv] Italian authorities have not addressed judgements in good faith and the same golden share measures were effective for more than a decade post-judgement.

The first ruling on golden shares has been on Italian Decree-Law 332/1994, which governed privatisation of SOEs.[v] Article 2 of the Decree-Law prescribed the implementation of further Decrees which would create a golden share in certain strategic companies. The Decree-Law did not infringe the Treaty by itself, as it merely empowered certain authorities to ‘activate’ it by further company-specific Decrees, stating which company shall be protected and how. Since the Decree-Law does not infringe the Community law per se – as long as the exercise of golden shares (laid down in further Decrees) passes the justification test – it becomes ‘untouchable’ in a way that it allows for a numerous amendments to ‘activating’ Decrees.  If golden shares ought to be found applied in unjustified manner, the ways in which they are applied could be changed, without the necessity to change the Decree-law itself. The conditions for exercise of golden shares, or more precisely – their absence, have become the subject of the Case C-58/99 in which the Commission sued Italy under what is now Article 258 TFEU. In absence of any justifications, in 2000 the Court found that the application of golden has been illegal. Even though the Italian government has expressed its willingness to comply prior to the judgement, no adequate amendments were undertaken.

The amendments which aimed at justifying the golden shares at stake were transposed into Article 66 of Financial Law No 488 of 23/12/1999 and the ‘activating’ Decree on 11/02/2000.[vi] This compliance measure aimed to provide a detailed explanation under which circumstances and how the Decree-Law 332/1994 should be executed, but failed to do so. These amendments were of declamatory character as they were merely repeating the requirements of the justification, while failing to specify what precisely the circumstances for their exercise are. This in turn retained the possibility of further disputes over legality of golden shares, which inevitably followed. The compliance initiative of Article 66 of No 488 acted as a smoke screen dispersing the attention from active golden shares. Acting in good faith would entail the Italian government, first and foremost, to abstain from vague and inadequate justification attempts which delayed final compliance as well as to abstain from implementation of new golden shares. Nonetheless, in 2001 following the condemning judgement in C-58/99, the Italian government implemented another golden share Decree-Law 192/2001, which has been overruled by the Court in C-174/04.[vii] In that case the Italian government tried once again to fiddle with the golden share amendments, but after being threatened with sanctions under Article 260 TFEU, it has fully abrogated contested provisions in 2006. Italian authorities have complied with the judgement on C-174/04 but it took one unsuccessful amendment and potential of application of penalties to achieve this.

As for the first Italian case on golden shares, the Article 2 of Decree-Law 332/1994 became subject of the preliminary ruling in Federconsumatori and later in C-326/07. In 2007 the Court has once again pointed on the incompatibility of the Decree-Law 332/1994 with the Community law in Federconsumatori, confirming the obstinacy of the golden shares. In this case the golden shares emerge in a newly amended format after yet another justification attempt via Article 4(227) to (231) Law 350 of 24/12/2003 and implementing Decree of 10/06/2004.[viii] This justification attempt emerged as a legislative answer to the Commission’s formal letter sent in February 2003, a second action under Article 258 TFEU on the Decree-Law 332/1994. The Italian authorities undertook to introduce new amendments by the end of 2003. The Law 350 was implemented in time, however, it did not contain justifications, but merely created a platform for further justification, by further Decree which was implemented in June 2004. However, the latter amendments were also insufficient to justify the use of golden shares. The new provisions of Law 350 alongside the Decree of 2004, have limited golden shares and introduced justifications based on ‘real and serious risk’ without specifying what exactly constitutes such risk.

These amendments became subject of the second condemning judgment in 2009 on C-326/07. Since compliance did not follow and no drafts were submitted for a review, the Commission proceeded with sanction-threats under Article 260 TFEU.  On 20 May 2010 Italy’s then Prime Minister Berlusconi has issued a Decree which aimed at addressing the Commission’s concerns and the Court’s ruling(s) by amending the criteria for execution of special powers laid down in ‘activating’ Decree 2004.[ix] The compliance measure of Berlusconi’s Decree of 2010 appears to be even more controversial, as it comprised of just one Article that in turn comprised of a single sentence which repeals contested justifications of Decree 2004! [x]   Berlusconi’s Decree repeals Article 1(2) of 2004 Decree (the one that laid down the criteria for exercise of special powers of Decree-Law 332/1994 and has been overruled by the Court in C-326/07). By eliminating the sole justifications of exercise of golden shares Berlusconi has ‘addressed’ the judgment. The only justification of special powers has now been repealed and this ‘compliance initiative’ does neither justify nor eliminate golden shares as such. Berlusconi’s Decree of 20 May 2010 appears to be a misleading measure that only aimed at further procrastination, acting as another smoke screen.

On 16 February 2011 the Commission has started the second stage of infringement proceedings and issued a reasoned opinion urging Italy to comply. During that time the Italian government has been going through one of the most difficult economic and political situations in its modern history: the European Debt crisis.  It has been a ‘lucky co-incidence’ that the need to adopt new golden share amendments has co-incised with some radical changes within the Italian government. Berlusconi and his government had to resign on 12 February 2011 while the new ‘technocratic government’ had to be formed in order to implement severe austerity measures. A new Prime Minister has been formally appointed – Mario Monti, the former EU Competition Commissioner, known for his tough stance on pro-European integration and competition enhancement. The technocratic government would stay in office until the elections in April 2013. By that time several ‘unpopular’ economic and social reforms have to be introduced and new provisions on golden shares would fall within that scope.

After more than a decade of procrastination, the Italian government seems to have finally addressed the issue of golden shares overruled back in 2000 by significantly amending the original provisions by new Decree-Law No 21 of 15 March 2012.[xi] This new Decree-Law 21/2012 establishes a notion of ‘strategic assets’ which are subject to golden shares and introduces a ‘fit and proper’ test for potential investors who seek participation in control of strategic companies. The golden share provisions now appear to have a considerably narrower scope of application and increased legal certainty. But yet again, the Law has been amended, not repealed, which in turn has the potential to be incompatible with EC law.  The Commission is currently analysing new provisions and awaits the implementation of the ‘activating’ Decrees which would further establish the conditions for the applications of golden shares. Whether or not Italy has finally complied with both C-58/99 and C-326/07 remains to be seen, while the battle for illegal golden shares continues, and State-driven protectionism is on the rise due to economic crisis.

[i] The obligation of sincere co-operation has been previously enshrined by the Article 5 of the Treaty of Rome, then became Article 10 EC and has been in principle replaced by 4(3) TEU which states: ‘Pursuant to the principle of sincere cooperation, the Union and the Member States shall, in full mutual respect, assist each other in carrying out tasks which flow from the Treaties. The Member States shall take any appropriate measure, general or particular, to ensure fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions of the Union. The Member States shall facilitate the achievement of the Union’s tasks and refrain from any measure which could jeopardise the attainment of the Union’s objectives.’

[ii] Criminal proceedings against Sanz de Lera and Others (C 163, 165 & 250/94), 14 December 1995, paras. 23-28, the Commission accepted that fundamental freedoms may be restricted by national measures justified on grounds of public policy, public security or public health or by overriding reasons in the public interest, but only in so far as there is no Community harmonising legislation providing for measures necessary to ensure the protection of the fundamental interests of the State. These measures have to meet the requirement of legal certainty and proportionality, see also the Court’s judgement Commission v Italy, C-326/07 of 26 March 2009, at para. 14; Commission v Portugal, C-367/98, judgement of 4 June 2002, at para 48;

[iii] Commission v. Italy, C-58/99, judgment of the CJEU of 23 May 2000; Commission v. France, C-483/99, 4 June 2002; Commission v. Belgium, C-503/99, 4 June 2002 (justified); Commission v. Portugal,  C-367/98, 4 June 2002; Commission v. United Kingdom, C-98/01, 13 May 2003; Commission v. Spain, C-463/00, 13 May 2003; Commission v. Italy C-174/04, 02 June 2005; Joined cases C-282/04 and C-283/04, Commission v. Netherlands, 28 September 2006; Federconsumatori v. Commune di Milano, C-463/04 and C-464/04, referred to the Court for preliminary ruling, 6 December 2007; Commission v. Germany, C-112/05, 23 October 2007; Commission v. Spain, C-274/06, 14 February 2008; Commission v. Spain, C-207/07, 17 July 2008; Commission v. Italy, C-326/07, 26 March 2009; Commission v. Portugal , C-171/06, 8 July 2010; Commission v. Portugal, C-543/08, 11 November 2010

[iv] (Italian Privatisation Law as amended), Decreto del Presidente del Consiglio dei Ministri, definizione dei criteri di esercizio dei poteri speciali, di cui all’art. 2 del decreto-legge 31 maggio 1994, n. 332, convertito, con modificazioni, dalla legge 30 luglio 1994, n. 474; Decree-Law No 332 of 31 May 1994 (GURI No 126 of 1 June 1994), converted, after amendment, into Law No 474 of 30 July 1994, (GURI No 177 of 30 July 1994)

[v] Decreto del Presidente del Consiglio dei Ministri, definizione dei criteri di esercizio dei poteri speciali, di cui all’art. 2 del decreto-legge 31 maggio 1994, n. 332, convertito, con modificazioni, dalla legge 30 luglio 1994, n. 474; Decree-Law No 332 of 31 May 1994 (GURI No 126 of 1 June 1994), converted, after amendment, into Law No 474 of 30 July 1994, (GURI No 177 of 30 July 1994)

[vi] The original text of the Art.66 of Financial Law No 488/1999 (LEGGE 23 dicembre 1999, n.488, Disposizioni per la formazione del bilancio annuale e pluriennale dello Stato (legge finanziaria 2000) could be found in Italian at: http://www.normattiva.it/uri-res/N2Ls?urn:nir:stato:legge:1999;488 Gazzetta Ufficiale, n. 302 del 27-12-1999, for Implementing Decree of the Prime Minister 11/02/2000 see http://gazzette.comune.jesi.an.it/2000/40/5.htm

[vii] The law titled ‘Urgent provisions to ensure the liberalisation and privatisation of specific public service sectors’, GURI No 170 of 24 July 2001, published in Italian Official Gazette No 120 on 25 May 2001, the original text could be found at: http://www.normattiva.it/uri-res/N2Ls?urn:nir:stato:decreto-legge:2001;192,

[viii] Gazzetta Ufficiale No 299 of 27 December 2003 and Gazzetta Ufficiale No 139 of 16 June 2004

[ix] Decreto Del Presidente Del Consiglio Dei Ministri (DPCM) 20 maggio 2010 (published in Italian Official Gazette n.117 del 21-5-2010 ) (10A06506)

[x] Decreto Del Presidente Del Consiglio Dei Ministri 20 maggio 2010 (published in Italian Official Gazette n.117 del 21-5-2010 ) (10A06506)

[xi] Decreto-Legge 15 marzo 2012, n. 21  Norme in materia di poteri speciali sugli assetti societari nei settori della difesa e della sicurezza nazionale, nonche’ per le attivita’ di rilevanza strategica nei settori dell’energia, dei trasporti e delle comunicazioni. (12G0040) (published in Italian Official Gazette n.63 del 15-3-2012)

 

Nationalism and the European project

Nikolay Domanov

LLM, MA in International Relations, Sofia University; Post-Graduate Diploma candidate in EU Competition Law, King’s College London
 

An idea with tremendous potential, a clear vision and huge emotional discharge emerged six decades ago in Europe – the creation of a Union which can bring piece and prosperity to the peoples of Europe. Unfortunately, 60 years later, this idea has yet to be accomplished.

European integration was conceived mainly as a continuous process. Communities were created not to solidify the status quo, but to create the foundations for the future development of the Continent and for the achievement of specific objectives; at first, economic, and, later, political.

For almost any political analyst it is clear that the EU needs further reforms, a much stronger economy, needs to protect its own integrity. However, the primary question that remains is: what does the EU actually need protection from? The answer appears to be it needs protection from itself. In the current economic environment it became clearer than ever that, in fact, it is the Union’s economy and the unity of its enduring diversity that are in deep crisis.

The global economic crisis set a special course for the whole European project. The current economic problems of the European citizens increased their skepticism of a unified European Union. This has resulted in yet another crisis of confidence in the European institutions, the increase of democratic deficit and the revival of concern over nationalism in Europe.

Under the Lisbon Treaty the EU was supposed to be politically and, thus, economically stronger. Indeed, the Lisbon Treaty is a good starting point as well as an inevitable phase in the integration process. According to its provisions, EU institutions enjoy greater powers: the European Council became grounded as a formal institution[1]; the European Parliament expands its powers[2] in terms of law making, scrutiny, budget, constitutional and foreign affairs; the meetings of the Council of Ministers, when it passes law, shall be public[3]; the Community method is now extended into the area of freedom, security and justice[4]; and the Charter of Fundamental Rights has become legally binding[5].

However, despite all these new provisions, it seems that recently the gap between the so-called “eurosceptics” and the “eurooptimists” has grown even bigger. It was ironic that it was the negative outcome of French and Dutch referendums on the draft Constitution of Europe that held back the Union’s integration aimed to overcome exactly those emerging nationalist ideas. And it shall be made clear that the EU needs further reform, mainly due to the fact that in many ways the present system is opaque and exhausted. This, however, means that the Lisbon Treaty lacks the potential needed to meet all of the current requirements raised by the ongoing social, economic and political events.

In these extraordinary times, instead of speeding the integration process Western democracies worried about their own future have felt the need to slow down Integration by introducing questionable mechanisms jeopardising EU fundamental freedoms.

Genuinely worried by the “Polish plumber”[6], and later by the cheap labour force coming from ethnic minority workers (mainly from Eastern Europe), the old EU Member States have felt the need to firstly limit access to their labour markets secondly to their systems of social insurance, and finally to their borders. The recent requests for partial reintroduction of border control within the Schengen area again raised the issue of how fragile the Union is. Moreover, this threat was not a minor one but against one of the fundamental freedoms and ultimate goal of the Union: the free movement of people and goods.

Following the Greek debt distress, the expulsion of Roma from France, the refugee waves to Italy and even the creation of a double standard in the attempts of Bulgaria and Romania to join the Schengen area, everyone in Europe realised that the European integration model is in deep crisis. And this crisis goes far beyond the democratic deficit against which the European bureaucrats felt very comfortable to fight. As a result, four critical areas in EU policy have been recognised: the massive migration flows from the periphery to the centre of the Union, the loss of national sovereignty and identity, Islamization and the problems with the Roma minority.

In this complex socio-political climate of economic shortages, the far right political ideas seem to have become a gathering point for many. The social contract upon which the EU was founded has been weakened by the ongoing economic crisis, and this led to the emergence of various nationalist parties across Europe, which have been trying to promote their own understanding of national identity and thus endangering the European project.

According to different analysis, nationalists’ concerns in the East and in the West are quite different. In Eastern Europe, on one hand, the main issue is believed to be the presence of ethnic minorities, especially Roma, and the negative consequences of their cheap labour. The Western world, on the other, seems to have created a bias against certain religions given the terrorist attacks that have occurred in the last century. As a result many nationalist parties claim that the foundations of Europe lie within Christianity only and thus other religions’ traditions and beliefs are said to be incompatible with the ‘European idea’.

Nationalist parties claim that the excessive granting of various rights to minority groups is actually incompatible with the principles of the ‘welfare state’ and it destroys its foundations. ‘Sweden Democrats’, for instance, claim that the welfare state is at risk of extinction because of the migration flows, while ‘Attack’ in Bulgaria criticise ethnic and religious minorities in the country for having too many privileges.

As a general rule, all nationalist parties feel that governments transfer too much sovereignty to the EU. That’s why some nationalist parties see the withdrawal of EU membership as the solution to all problems. For example, organisations such as the Freedom Party in Austria and the Danish People’s Party have repeatedly demonstrated opposition to EU accession and its enlargement, while the Swiss People’s Party seeks to keep the Union out of Switzerland. However, other parties find EU membership acceptable, but reject its future enlargement. For these parties, the accession of Turkey, a Muslim country of 74 million people, is a major argument against EU future enlargement.

Despite the bitter experience of World War II, some countries have a lasting tradition of supporting nationalist groups. Switzerland is a good example of this. In the last federal election nationalist parties collected an average of 28 percent of the vote, and Swiss People’s Party is the leader. ‘National Front’ in France has received approximately 14 percent of the vote in the last three presidential elections. Similar results can be observed in other countries such as the Netherlands, Austria and Denmark. Finland can be recognised as the state in which the support of the nationalist parties had the highest growth in the last two electoral campaigns. Further, participation of nationalist parties in the government under some form can be seen in countries like Italy, Hungary and Bulgaria.

It is worth pointing out that recently a very interesting phenomenon can be observed. As a general rule it is the mainstream parties that usually control the executive branch in the country. With the emergence of nationalist parties, however, support for mainstream parties has decreased and it is not as easy as it once was for them to build powerful majorities in the national and regional parliaments. It turns out that these established parties have to cooperate and comply with the requirements of the small (often the nationalist right-wing) parties in order to be able to maintain their participation in the government. This trend could turn out to be very dangerous in the near future, not only for the Member States, but for the EU as a whole.

To determine the future of the nationalist parties is as difficult as to determine the future of the EU itself. The fact is that the more difficulties the European integration process encounters, the more popular the nationalist alternatives will become.

For the federalists it is clear that the future of the EU lies far away from the nationalist ideas as they strive for a truly federal state capable of solving all current problems. In a federal union the present inter-institutional balance shall be changed; a bicameral parliament shall be established comprised of the European Parliament and the Council of Ministers with a true executive body: the Commission; and a real European Court. In terms of finance, the EU treasury and European Monetary Fund shall be established. These innovations will clearly dissolve many of the current economic and political problems the EU is facing. However, the national sovereignty issue will remain. This could only be overcome by introducing a truly European political space where the EU dimension of politics is presented at a national level.

It is clear that the prospect of successful European integration is a desirable goal. A federal Union is one of the proposals for a possible development of the European Project, but there may also be others that have yet to be seen. However, nationalism is definitely not one of them.

[1] Article 13, paragraph 1 of the Treaty on European Union.

[2] For further reference see Article 14 of the Treaty on European Union and Articles 223-234 of the Treaty on the Functioning of the European Union.

[3] Article 16, paragraph 8 of the Treaty on European Union.

[4] For further reference see Articles 67-76 of the Treaty on the Functioning of the European Union.

[5] By virtue of the first subparagraph of Article 6(1) of the Treaty on European Union.

[6] This was a phrase used as a symbol of cheap labour coming in from Central Europe as a result of the Directive on services in the internal market during the EU Constitution referendum in France in 2005. It was first used by Philippe Val in Charlie Hebdo and later popularised by Philippe de Villiers