Promoting solidarity: From public services to a european model of competition?

Common Market Law Review

Volumn 44, Issue 4, 2007, Pages 1057-1080

  Ross, Malcolm ^a  

^a UNIVERSITY OF SUSSEX   (United Kingdom)

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EID: 51249146455     PISSN: 01650750     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (127)

1. Giubboni, "Free Movement of Persons and European Solidarity", 13 ELJ (2007), 360, 376.
2. EP Committee on Employment and Social Affairs, Report on social services of general interest in the European Union, 6 March 2007 A6-0057/2007.
3. SGEIs (typically postal services or energy and telecoms utilities) are subject to the rules of the EC Treaty, "in particular the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them."
4. Two Commission Communications on Services of General Interest, O.J. 1996, C 281/3 and O.J. 2001, C 17/4 were followed by its Green Paper on Services of General Interest COM(2003)270 and White Paper on Services of General Interest COM(2004)374.
5. White Paper, note 4 supra.
6. Implementing the Community Lisbon programme: Social services of general interest in the European Union COM(2006)177 final.
7. Ibid., although health services were shelved by this document for separate, later, discussion.
8. Directive 2006/123/EC on services in the internal market, O.J. 2006, L 376/36. See Editorial comments 43 CML Rev. (2006), 307. For a wider review, see Davies, "The Services Directive: Extending the country of origin principle and reforming public administration", 32 EL Rev. (2007), 232.
9. Directive 2006/123, Art. 2(2)(a).
10. Ibid., Art. 2(2)(f);
11. the exclusion applies "regardless of the ways in which they are organized and financed at national level or whether they are public or private." For further criticism, see EP Committee on the Internal Market and Consumer Protection, Report on the impact and consequences of the exclusion of health services from the Directive on services in the internal market 10 May 2007, A6-0173/2007.
12. Ibid., Art. 2(2)(j). This specific wording, apparently exhaustive, would seem capable of inadvertently leaving some social services within the scope of the Directive.
13. E.g. the resolution adopted by the ETUC Executive Committee October 2006: www.etuc.org
14. European Parliament Resolution on the Commission White Paper on services of general interest, 27 Sept. 2006, point 12.
15. See Temple Lang, "The duties of cooperation of national authorities and courts under Article 10 EC: Two more reflections", 26 EL Rev. (2001), 84.
16. Case C-106/89, Marleasing, [1990] ECR I-4135 although the Court subsequently deemed the doctrine to be "inherent" in the Treaty; see Joined Cases C-397-403/01, Pfeiffer and others, [2004] ECR I-8835 (Grand Chamber), para 114.
17. Joined Cases C-6 & 9/90, Francovich, [1991] ECR I-5357 where the Court expressly used Art. 10, albeit as a belt-and-braces longstop after initially describing the principle as "inherent".
18. This clearly constitutes a principle in the context of EC inroads into national procedural autonomy: see, e.g. Case C-432/05, Unibet, Grand Chamber judgment of 13 March 2007, nyr. Whether the term has a wider sense as a general principle of EU law is more controversial; see Ross, "Effectiveness in the European legal order(s): beyond supremacy to constitutional proportionality?" 31 EL Rev (2006), 474;
19. also Accetto and Zleptnig, "The principle of effectiveness: Rethinking its role in Community law", 11 EPL (2005), 375.
20. Ross, "Art. 16 EC and services of general interest: From derogation to obligation?" 25 EL. Rev. (2000), 22.
21. Case C-265/95, Commission v. France, [1997] ECR I-6959, where the Court observed: "Article [28 EC] requires the Member States not merely themselves to abstain from adopting measures or engaging in conduct liable to constitute an obstacle to trade but also, when read with Article [10]⋯, to take all necessary and appropriate measures to ensure that that fundamental freedom is respected on their territory." (para 32).
22. Case C-348/93, Commission v. Italy, [1995] ECR I-673, para 17.
23. See also Case C-415/03, Commission v. Greece, [2005] ECR I-3875 where the Court stated: "the Commission and the Member State concerned must respect the principle underlying Article 10 EC, which imposes a duty of genuine cooperation on the Member States and the Community institutions, and must work together in good faith with a view to overcoming difficulties whilst fully observing the Treaty provisions, and in particular the provisions on State aid" (para 42).
24. Case C-129/96, Inter-Environnement Wallonie, [1997] ECR I-7411.
25. Case C-212/04, Adeneler and others, [2006] ECR I-6057 (Grand Chamber) esp. paras. 121-124.
26. Ibid. para 123. After the expiry of the implementation period the positive interpretative obligations apply, as set out in Pfeiffer, note 15 supra. Quite what the difference is between these negative and positive duties upon national courts awaits further clarification.
27. E.g. Case C-2/91, Meng, [1993] ECR I-5751;
28. Case C-198/01, CIF v. Autorità Garante della Concorrenza e del Mercato, [2003] ECR I-8055. The latter, requiring remedies to be adopted by national competition authorities, may have interesting implications for breaches of Art. 16 EC if the arguments elsewhere in this paper are plausible. See Temple Lang, "National measures restricting competition and national authorities under Article 10 EC", 29 EL Rev. (2004), 397.
29. Or, indeed, Treaties: see Case C-105/03, Pupino, [2005] ECR I-5285 (Grand Chamber) esp. paras 41-43 for the extension of Art. 10 loyalty to Third Pillar matters. Also Case C-303/05, Advocaten voor de Wereld v. Leden van de Ministerraad, where the Grand Chamber refers to the "high degree of trust and solidarity between the Member States" in the context of the European Arrest Warrant, judgment 3 May 2007, para 57.
30. At least where the definition of SGEIs is restricted to those falling within Art. 86(2) EC.
31. See Skouris, "Effet utile versus legal certainty: the case law of the Court of Justice on the direct effect of directives", (2006) EBLR 241 for an interesting inside view on the ambit of "State- related" entities.
32. The Charter of Fundamental Rights of the Union, first adopted as a political declaration at Nice in 2000, and now forming Part II of the Constitutional Treaty 2004.
33. Giubboni, op. cit., note 1 supra; although he concedes that "it is not by chance" that solidarity "is at the centre of the web of values affirmed by the Charter" (at 374).
34. See Arnull, Dashwood, Dougan, Ross, Spaventa and Wyatt, Wyatt & Dashwood's EU Law 5th ed. (Sweet & Maxwell, 2006), p. 303.
35. Art. II-95 CT.
36. Menéndez, "The rights' foundations of solidarity: Social and economic rights in the Charter of Fundamental Rights of the European Union" ARENA Working Papers 03/1, accessed via www.arena.uio.no. In a further article, the same author claims that the social rights of the Charter represent the "true European acquis": "The Sinews of Peace: Rights to Solidarity in the Charter of Fundamental Rights of the European Union", 16 Ratio Juris (2003), 374.
37. Although an interesting problem may arise insofar as the application of the free movement rules (except goods) is not confined to State measures; solidarity in the sense used in the cases identified here does not seem easily transferable to infringing measures enacted by non-State actors. For recent views on how far the services provisions apply to private actors see A.G. Poiares Maduro in Case C-438/05, International Transport Workers' Federation and The Finnish Seamen's Union v. Viking Line and another (Opinion 23 May 2007) and A.G. Mengozzi in Case C-341/05, Laval un Partneri Ltd v. Svenska Byggnadsarbetareförbundet and others (Opinion 23 May 2007).
38. See Davies, "The process and side-effects of harmonisation of European welfare states" Jean Monnet Working Paper 02/06, www.jeanmonnetprogram.org/papers/06/060201.html; Ferrera, "Towards an 'open' social citizenship? The new boundaries of welfare in the European Union" in de Búrca (Ed), EU Law and the Welfare State (Oxford, OUP, 2005), ch 2;
39. Newdick, "Citizenship, free movement and health care: cementing individual rights by corroding social solidarity", (2006) 43 CML Rev., 1645.
40. Case C-372/04, Watts [2006] ECR I-4325 (Grand Chamber) and its precursors, e.g. Case C-157/99, Geraets-Smits and Peerbooms [2001] ECR I-5473. See generally, Hatzopoulos, "Health Law and Policy: The Impact of the EU" in de Búrca, op.cit, note 34 supra, ch 5.
41. Watts, note 35 supra, para 121.
42. Giubboni, note 1 supra, observes that transnational solidarity "cannot but remain conditional, and, in particular, can only be affirmed to the extent that it does not jeopardize the viability of national welfare systems." (at p. 375).
43. Case C-184/99, Grzelczyk, [2001] ECR I-6193, para 31.
44. Bell, "Civic Citizenship and Migrant Integration", 13 EPL (2007), 311, 313.
45. Dir. 2004/38, on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States O.J. 2004, L 158/77.
46. Ibid., Art. 16(1).
47. Dir. 2003/109/EC [2004] O.J. L16/44 (not applicable to UK, Ireland and Denmark). As Bell states, op. cit., note 39 supra, a gradated approach is applied to the rights of long-term residents, refugees and asylum seekers. Even the first group, whilst being able to move between EU States, is still subject to resources conditions.
48. There will also be cases involving "exit" situations, i.e. the extent of any continuing relationship between the EU citizen and his or her original State of nationality after departure: see Case C-192/05, Tas Hagen, [2006] ECR I-10451.
49. Case C-209/03, Bidar, [2005] ECR I-2119, para 56, elaborating on Grzelczyk, cited note 38 supra.
50. Case C-406/04, De Cuyper, [2006] ECR I-6947, para 91 of Opinion.
51. See, in particular, the approach taken to the solidarity owed to civilian war victims in Tas-Hagen, note 43 supra. A residence requirement to obtain the allowance was held to be incompatible with European citizenship. Although the Court noted that, "With regard to benefits that are not covered by Community law, Member States enjoy a wide margin of appreciation in deciding which criteria are to be used when assessing the degree of connection to society, while at the same time complying with the limits imposed by Community law", it went on to hold that the Netherlands residence rules were disproportional to the genuine solidarity aims of the allowance. (Judgment, esp. paras. 35-38).
52. Case C-413/01, Ninni-Orasche, [2003] ECR I-13187;
53. cf. Case C-138/02, Collins, [2004] ECR I-2703. The relevance of the degree of integration into the host State's society (or loss of links with home State) is replicated in Dir 2004/38, note 40 supra, Art. 28.
54. E.g. Davies, op. cit, note 34 supra.
55. The scope of State aid supervision is also limited by the reference to "certain undertakings" in Art. 87(1). "Undertaking" here appears to bear the same meaning as for Arts. 81-82.
56. For a fuller discussion see Wyatt & Dashwood's EU Law, note 30 supra, pp. 973-980.
57. Case C-160/91, Poucet and Pistre, [1993] ECR I-637;
58. Joined Cases C-264, 306, 354 & 355/01, AOK Bundesverband, [2004] ECR I-2493.
59. See Prosser, "Regulation and Social Solidarity", 33 Journal of Law and Society (2006), 364, who argues that social solidarity should be a justification in its own right for regulation and not just a second-best choice after market failure.
60. See also Wernicke, "Au nom de qui? The European Court of Justice between Member States, Civil Society and Union Citizens", 13 ELJ (2007), 380, who observes (at 387) that ideas of civil society are now returning after "decades where all social problems seemed to be thought of as either governmental failures to be solved by the market or as market failures to be remedied by the state."
61. Case C-205/03 P, FENIN, [2006] ECR I-6295. The Grand Chamber held that the CFI had rightly deduced that there was no need to dissociate the activities of purchasing goods from the subsequent use to which they were put when considering the nature of the purchasing activity. The management bodies of the Spanish health system were, accordingly, not undertakings for the purpose of Art. 82 EC when paying (or, more accurately, significantly delaying payment) for medical instruments. Cf. A.G. Poiares Maduro, who had been more demanding in his pursuit of whether the management bodies' activities could be dissociated.
62. Ibid., para 25, quoting Case C-35/96 Commission v. Italy, [1998] ECR I-3851.
63. Community Framework for State aid for research and development and innovation, O.J. 2006, C 323/1.
64. Ibid. para 3.1.1. lists these as "education for more and better skilled human resources, the conduct of independent R&D for more knowledge and better understanding, including collaborative R&D; the dissemination of research results".
65. Ibid. para 3.1.2.
66. Cf. the disarming statement made by A.G. Jacobs in Case C-222/04, Ministero dell'Economia e delle Finanze v. Cassa di Riparmio di Firenze SpA, [2006] ECR I-289: "If there were no possibility of a private undertaking carrying on a given activity, there would be no purpose in applying the competition rules to it."
67. Cf. the ETUC view on the Services Directive, note 8 supra, and its exemptions; see www.etuc.org
68. Following van Deth and Scarbrough (Eds.), The Impact of Values (Oxford: OUP, 1995) p. 28.
69. In addition to the Commission's documents, note 4 supra, see, e.g., the EP Committee on Employment and Social Affairs Report on social services of general interest in the EU, op.cit., note 2 supra: "SSGIs are designed to carry into effect values shared throughout Europe including, among others, social justice, equality, solidarity and the development of democracy and freedom, and whereas the ultimate purpose of the SSGI is to uphold citizens' fundamental rights and respect for human dignity,."
70. In particular, it would not seem to derive from the constitutional traditions of the Member States or from other international agreements.
71. Prosser, op. cit., note 52 at p. 381 (arguing from Durkheim).
72. Cf. Watkins, "Responsibility in Context" 26 OJLS (2006) 593, reviewing P Cane, Responsibility in Law and Morality (Oxford, Hart Publishing, 2002).
73. E.g. Giubboni, note 1 supra, and the discussion in subsection 2.3. supra.
74. See, in particular, the Opinion of A.G. Kokott in Tas Hagen, note 43 supra.
75. Opinion in Case C-475/99, Ambulanz Glöckner, [2001] ECR I-8089.
76. Opinion in Case C-340/99, TNT Traco, [2001] ECR I-4109.
77. Note 4, supra.
78. Decision 2005/842, O.J. 2005, L 312/67, On the Application of Art. 86(2) to State Aid in the Form of Public Service Compensation Granted to Certain Undertakings Entrusted with the Operation of Services of General Economic Interest. This was adopted on the basis of the Commission's supervisory powers under Art. 86(3).
79. Case C-280/00, Altmark Trans, [2003] ECR I-7747.
80. Buendía Sierra, Exclusive Rights and State Monopolies under EC Law (Oxford, OUP, 1999), sees Art. 16 as symbolic at best with no impact on either Art. 86(2) or case law.
81. See also the rather gloomy assessment in Duff (Ed), The Treaty of Amsterdam (London, Federal Trust, 1997) at p. 84.
82. See Ross, note 18 supra.
83. For a fuller discussion of Art. 86(2), see Wyatt & Dashwood's EU Law, note 30 supra, ch. 26.
84. Baquero Cruz, "Beyond Competition: Services of General Interest and European Community Law" in de Búrca, op. cit. supra note 34, at p. 177.
85. Schwintowski, "The Common Good, Public Subsistence and the Functions of Public Undertakings in the European Internal Market", 4 EBLR (2003), 353. In similar vein, see Szyszczak, "Public Service Provision in Competitive Markets", 20 YEL (2001), 35.
86. Prosser, "Competition Law and Public Services: From Single Market to Citizenship Rights?" 11 EPL (2005), 543;
87. Ross, "The Europeanization of Public Services Supervision: Harnessing Competition and Citizenship?" 23 YEL (2004), 303;
88. th International Consumer Law Conference, Lima, May 2005).
89. Proposal for a Framework Directive on Services of General Economic Interest 30 May 2006. www.socialistgroup.org/gpes/media/documents/23713-23713- project-directive-en-revised-060530.pdf
90. Note 13 supra, para O.
91. Most obviously illustrated by the "fundamental status" pronouncement in Grzelczyk, note 38 supra.
92. E.g. Case C-176/03, Commission v. Council, [2005] ECR I-7879, where an EC pillar competence to adopt environmental policy was held to imply a power to require Member States to adopt criminal sanctions to render it effective. This power had thus wrongly been diverted through the decision-making machinery of the third pillar.
93. Ross, note 17 supra. For further examples of renewed interest in the expression and analysis of EU norms, see: Lenaerts and Corthaut, "Of birds and hedges: the role of primacy in invoking norms of EU law", 31 EL Rev. (2006), 287;
94. Prechal, "Member State liability and direct effect: What's the difference after all?" 17 EBLR (2006), 299.
95. The familiar tests set out in Case 26/62, Van Gend en Loos, [1963] ECR 1.
96. Although pursuing a Francovich claim for an infringement of Art. 16 will still run into difficulties when the standard conditions for liability are applied - is that provision for the benefit of individuals, how is a serious (clear) breach to be determined and between whom is the causal link to be established?
97. See the discussion of Art. 10 EC, accompanying notes 21-23 supra.
98. Case C-144/04, Mangold v. Helm, [2005] ECR I-9981. For criticism, see Editorial Comments: "Horizontal direct effect - A law of diminishing coherence?" 43 CML Rev. (2006), 1.
99. Mangold, note 86 supra, para 74.
100. For a recent example, see Case C-411/05, Félix Palacios de la Villa v. Cortefiel Servicios SA, where A.G. Mazák launched a stinging attack on Mangold, stating that the Court had "set foot on a very slippery slope, not only with regard to the question whether such a general principle of law on the non-discrimination on grounds of age exists, but also with regard to the way it applied that principle." (Opinion, 15 Feb. 2007, para 133).
101. See Case C-176/03, note 81 supra. Also Case C-105/03, Pupino, [2005] ECR I-5285;
102. Joined Cases C-392 & 422/04, i-21 Germany GmbH, Arcor v. Germany [2006] ECR I-8559.
103. See, inter alia, Giubboni, "Free movement of persons and European solidarity" URGE Working Paper 9/2006, online at www.urge.it; Ferrera, "Friends, not Foes: European Integration and National Welfare States" URGE Working Paper 10/2006, online at www.urge.it; Davies, "Competition, Free Movement, and Consumers of Public Services", (2006) EBLR 95.
104. E.g. the Court's reasoning in Case C-372/04, Watts, note 35 supra, concerning the use of the free movement of services rules to challenge the way NHS waiting lists were determined.
105. E.g. Prosser, op. cit. note 77 supra;
106. Menéndez, "The Sinews of Peace⋯", op. cit. note 32 supra.
107. See e.g. Szyszczak, "Experimental Governance: The Open Method of Coordination", 12 ELJ (2006), 486;
108. Trubek and Trubek, "Hard and soft law in the construction of social Europe: the role of the Open Method of Coordination", 11 ELJ (2005), 343.
109. Cf. the evaluative and reporting processes adopted under the Services Directive 2006/123, note 8 supra. In particular, see Chapter VI on administrative cooperation, including the duty placed upon Member States by Art. 28 to "put in place measures for effective cooperation with one another⋯"
110. Notably from the Socialists and Greens in the European Parliament. The latter have called for an EU level observatory of services of general economic interest and for a legal framework that does not focus only, or even mainly, on the distinction between economic and non-economic services; see www.greens-efa.eu
111. Note 13 supra.
112. Ibid., para A. The other principles listed are: cooperation, open borders, competition, subsidiarity, proportionality and democracy.
113. Ibid., point 10.
114. Cf. the Commission's own Methodological Note for the Horizontal Evaluation of Services of General Economic Interest COM(2002)331 final; this was roundly criticized in some quarters: see www.psiru.org/reports/2005-03-EU- U-horizeval.doc
115. Although the PSEG document identifies specific "Users' Rights", mediated through a competent authority. Thus, Art. 19 provides: "The competent authority shall ensure that the supply and operation of the services of general economic interest have a high level of user protection and pay particular attention to the categories of users who are most disadvantaged, most isolated, or most economically or socially vulnerable."
116. For an interesting example of the management of this type of problem, see the current process for the Clyde & Hebrides Ferry Services Tender stakeholder consultation, Feb 2007: www.calmac.co.uk
117. French acronym for links between actions of rural development: Liaison entre actions de développement rural. The method was formerly a separate Community Initiative but now mainstreamed as the fourth axis of the Rural Development Programmes 2007-2013 under Reg. 1698/2005. I am grateful to Joe McMahon for alerting me to the possible parallels.
118. From LEADER+ website, see ec.europa.eu/agriculture/rur/leaderplus/index- en.htm.
119. Schoukens, Review article, "Europe at struggle with social welfare", 13 ELJ (2007), 424, 432.
120. Hatzopoulos, "Why the Open Method of Coordination is bad for you: A letter to the EU", 13 ELJ (2007), 309. However, he makes clear he favours communitarization of OMC, not its abandonment.
121. Ibid., at 320; the exception being the European Council.
122. E.g. by the creation of designated European agencies, opening up OMCs to the European Parliament and introducing fundamental rights monitoring.
123. Ibid., at 334.
124. See further, Héritier, "Market integration and social cohesion: The politics of public services in European regulation", 8 Journal of European Public Policy (2001) 825.
125. Cf. Zielonka, "Plurilateral governance in the enlarged European Union", 45 JCMS (2007), 187.
126. Op cit., note 92 supra, at p. 396.
127. See Commission's White Paper, note 4 supra.