The Week Nº23

IN-DEPTH:

Are football’s transfer rules caught by the Charter? AG Szpunar’s Opinion in FIFA v. BZ (C-650/22)

Guillermo Íñiguez

Another Episode on Horizontal Direct Effect of Directives, Or: Who Should Clean Up the Mess? Case C-316/22 Gabel Industria Tessile

Justin Lindeboom

The will of the legislator and the direct effect of EU international agreements (Case C -382/21 P KaiKai Company Luigi Lonardo

Judgment in Case C-605/21, Heureka Group: a Commission’s decision must not be final for bringing an action for damages

Maddalen Martín Arteche

Excise goods accidentally lost during a denaturing process of ethyl alcohol shall not be considered as a release for consumption (Case C-509/22 Girelli Alcool)

Mariya Senyk

COMPETITION CORNER: SYMPOSIUM ON COMPETITION LAW AND REGULATION

The case of EU telecoms – past and future

Martin Cave

Revitalising the EU Postal Market: Lessons from Telecom’s Competitive Edge

Mateusz Chołodecki

THE LONG READ:

The direct effect of CFSP norms in light of Common Position defining common rules governing the control of exports of military technology and equipment

Alina Carrozzini

HIGHLIGHTS OF THE WEEK

IN-DEPT H

Are football’s transfer rules caught by the Charter? AG Szpunar’s Opinion

in FIFA v. BZ (C-650/22)

Guillermo Íñiguez

Introduction

On 30th April, Advocate General Szpunar handed down his Opinion in FIFA v. BZ (C-650/22), also known as the Diarra case. Diarra, the first sport-related dispute to reach the Court of Justice since the so-called ‘December judgments’ (European Super League Company, Royal Antwerp, and ISU), concerns FIFA’s rules on the International Transfer Certificate (‘ITC’), a document which players registered at one national football association must obtain before being able to register with another football association. The rules governing this process are set out in FIFA’s Regulations on the Status and Transfers of Players (‘the RSTP’ or ‘the rules’).

Two legal issues are at stake in Diarra. The first, most straightforward issue, is whether the FIFA rules are compatible with Articles 45 and 101 TFEU. The second, more complex one, concerns the applicability of the Charter of Fundamental Rights (‘CFR’) to rules by sport governing bodies such as FIFA. Both aspects will be addressed in turn in this Op-Ed, which will conclude by exploring the constitutional implications of AG Szpunar’s Opinion.

Legal framework and factual background

As stated above, players seeking to move from one football federation to another must obtain an ITC before being able to register with the latter. According to the FIFA rules, however, national associations are not to issue an ITC if the player in question is engaged in a contractual dispute with a former club. More specifically, Articles 17(1), (2) and (4) RSTP provide that, where a player terminates a contract wthout just due cause, the player and the club subsequently employng that player will be jointly and severally liable for any compensation owed to the first club.

In such cases, sporting sanctions may also be imposed upon the club signing any such player. Conversely, Article 9 RTSP and Article 8(2), paragraph 7 of Annex 3 to the RTSP hold that the national association to which the former club belongs is entitled not to deliver an ITC where there is a dispute between the former club and the player (AG Szpunar, points 38-40). Given that an ITC is a prerequisite for a player to be effectively registered in the new club, these rules establish both legal and economic barriers to players’ free movement within the internal market.

In the dispute giving rise to the main proceedings, BZ, a professional football player, had attempted to enter into a contract with Sporting Charleroi, a Belgian football club. However, according to both FIFA and the Belgian football federation (‘URBSFA’), the player could not be issued an ITC because a contractual dispute with

Lokomotiv Moscow, a previous employer of his, was still pending before FIFA’s Dispute Resolution Chamber (‘DRC’). In May 2015, the DRC upheld Lokomotiv Moscow’s claim in part, awarding the club 10.5 million EUR in compensation while also holding that Article 17.2 RSTP would not apply to BZ in the future. This decision was upheld by the Court of Arbitration for Sport in 2016 (paras 13-20).

In July 2015, BZ entered into a contract of employment with Olympique de Marseille. He subsequently brought proceedings before a French court, arguing that the contested provisions breached Union law and seeking 6 million EUR’s worth of damages for loss of earnings. The first instance court found BZ’s action to be well founded in principle and ordered FIFA and the URBSFA to pay 60,001 EUR. FIFA and the URBSFA brought an appeal before the Court of Appeal in Mons, which stayed proceedings and referred, to the Court of Justice, a question concerning the compatibility of the FIFA rules with Articles 45 and 101 TFEU (paras 21-24).

The legal issue raised by the referring court is a straightforward one, with AG Szpunar finding that the contested provisions are precluded by both Article 45 and Article 101 TFEU. In reaching this conclusion, he applies the Court’s long-standing case law on the application of EU economic law to sports – a body of case-law which was most recently applied in the December judgments, but which had been developed long before those rulings.

The free movement of workers

In relation to Article 45 TFEU, AG Szpunar begins by holding that ‘little doubt as to the restrictive nature of all the contested provisions.’ This is ‘evidenced not least by the fact that none of the parties to the present proceedings attempts to question [its] restrictive nature’ (point 42). By threatening players (and therefore clubs), with financial liability, with sporting sanctions, and with ‘the non-issuance of the ITC’, the FIFA rules ‘are such as to discourage or dissuade clubs from hiring the player for fear of a financial risk’ (point 43). Indeed, so egregious is this barrier to the free movement of workers that the Advocate General finds no need to examine ‘whether the contested provisions constitute indirect discrimination … or whether they are a mere obstacle to the free movement of persons’ (point 44).

Having discussed the above, the Opinion turns to the possible justification of the contested practices under Articles 45 TFEU. As is well known, restrictions on the free movement of workers will breach Article 45 TFEU unless they (i) fall under Article 45(3) TFEU or can be objectively justified; and (ii) observe the principle of proportionality. On the facts, the Advocate General accepts the objective justifications put forward by FIFA and URBSFA: namely, the need to ‘maintain contractual stability in the professional football sector’ and to ensure that employment contracts are respected by both players and clubs (points 61-62). However, it is at the proportionality stage that they fall short. The Opinion addresses, one by one, the FIFA rules on compensation for breach of contract (point 67); on joint and several liability and sporting sanctions (point 68); and on the non-issuing of the ITC (point 69). In doing so, it contests the suitability and/or necessity of all three sets of rules, finding – respectively –their implications ‘draconian’, their enhancement of legal certainty questionable, and their justification ‘tenuous’.

The competition law analysis

No less straightforward is the contested provisions’ potential breach of Article 101(1) TFEU. After finding that the contested provisions constitute decisions by an association of undertakings and that the so-called ‘Albany exception’ does not apply (para 46), he turns to whether they constitute a ‘by object’ or a ‘by effect’ restriction of the competition rules (paras 51-57). In line with the Court’s well-known approach to Article 101(1) TFEU, this categorization is fundamental: if the contested provisions are deemed to constitute restrictions by object, they can only be justified under Article 101(3) TEU; conversely, if they are found to constitute restrictions by object, a broader range of objective justifications can apply to them.

In his Opinion, AG Szpunar finds ‘strong indications that there is a restriction of competition by object.’ In his words, ‘the consequences of a player terminating a contract without just cause are so draconian that it is highly unlikely that a player will go down this route’. Instead, ‘the contested provisions are designed in such a way as to have a deterrent effect and send a chill down each player’s spine’, as well as down that of any clubs wishing to employ that player (point 53). By limiting clubs’ ability to switch clubs and the ability of these clubs to access talented players, the most important factor of production in international football (as recognised by the Court in Royal Antwerp), the contested provisions constitute by-object restrictions of Article 101(1) TFEU. Therefore, they can neither benefit from the Wouters/Meca-Medina doctrine nor can they be saved by applying Article 101(3) TEU (points 54-59).

Can the Charter apply to FIFA’s rules?

Undoubtedly, the most consequential point of law raised by Diarra is whether the Charter of Fundamental Rights (‘CFR’) can apply to FIFA’s rules. Although this question is not asked by the referring court, Article 15 CFR is relied by one of the parties to the main proceedings. Therefore, AG Szpunar addresses the Charter’s applicability (points 70-87).

The most obvious obstacle to Article 15 CFR’s application to the present proceedings is Article 51(1), which sets out the Charter’s field of application. According to this provision, the Charter applies to EU institutions, and applies to Member States only if they are ‘implementing’ Union law. Although FIFA is neither an EU institution nor a Member State, AG Szpunar concludes (i) that on the facts, it can be equated to a Member State; and (ii) that its rules can constitute an implementation of Union law for the purposes of Article 51(1) CFR.

Despite the momentous implications of this finding, the Advocate General portrays it as a logical, straightforward extension of the Court’s existing case law. In essence, he notes that ‘in a situation such as that of the present case, private entities such as FIFA are functionally comparable not to an EU institution, but to a Member State seeking to justify a restriction of a fundamental freedom.’ Given that the Court has already found the free movement provisions to apply to bodies such as FIFA (Walrave and Koch); and given that, on the facts, FIFA can be considered akin to a Member State derogating from the fundamental freedoms, ‘it is only logical … that the Charter should

apply’ to FIFA in the same way that they apply to Member State’. In other words, he concludes, ‘if the Court did not have an issue with applying Article 45 TFEU horizontally to an entity such as FIFA, the same must apply with respect to the application of the Charter (point 75).

Having established the above, he then turns to the Charter’s ‘implementation’. In addressing this point, he relies on the Court’s judgment in Åkerberg Fransson (C-617/10) to conclude that there is ‘no reason why in this particular instance the provisions of the Charter should not be applied in the sense that individuals can rely on them against an entity such as FIFA’ (points 76-79).

His analysis of the material scope of Article 15 CFR (points 81-87) is essentially identical to that of Article 45 TFEU. Beyond the specific characteristics of the case, however, his most interesting analysis is whether FIFA’s RSTP can be considered a ‘law’ for the purpose of Article 52(1) CFR, which governs the limitation of rights contained in the Charter. AG Szpunar embraces a functional approach to this question: he understands the RTSF to constitute a ‘material’ law, and therefore finds that ‘once an act of FIFA or the URBSFA is considered to be within the scope of the Charter in a situation such as that of the present case, then that act is to be considered a ‘law’ within the meaning of Article 52(1) of the Charter’ (point 85).

Conclusion: A further ‘constitutional moment’ in EU sport law?

When the application first reached the Court of Justice, even the most well-informed observer could be excused for viewing FIFA v. BZ as a run-of-the-mill dispute. At first sight, the case is a simple one, concerning a fairly egregious breach of Article 45 TFEU, an even more straightforward violation of Article 101(1) TFEU, and a relatively poor attempt by FIFA and URBSFA to justify their restrictive practices. Despite the above, or precisely because FIFA’s transfer rules seem so obviously to breach the free movement and competition rules, the Court’s judgment raises several interesting points.

From a purely methodological perspective, FIFA illustrates a trend which some commentators have highlighted in recent months: namely, that competition law is increasingly becoming the driving force behind the Court’s sportrelated case law, and that its analysis need not be identical to that conducted under the free movement provisions. Second, and from a systemic point of view, European football could witness a new Bosman moment, with the ITC – one of the cornerstones of FIFA’s global transfer system – coming under judicial scrutiny and ultimately being deemed incompatible with Union law.

Far more important, however, are AG Szpunar’s findings that FIFA’s rules can fall within the scope of the Charter, both under Article 51(1) and, where FIFA seeks to derogate from the Charter, under Article 52(1). As the Advocate General himself acknowledges, this finding would be of huge ‘constitutional significance’, providing parties with a new tool through which to challenge rules and practices by sport governing bodies such as FIFA. As well as proving a further step in the integration of sporting rules into the EU’s legal architecture, it could also contribute to rebalancing football’s hugely unequal bargaining power, affording players a greater chance to

challenge, and ultimately strike down, rules which restrict the rights they enjoy under Union law. Whether the Court of Justice embraces its approach or whether, conversely, it shies away from doing so, will form the next episode in the EU sport law saga.

Guillermo Íñiguez is a DPhil in EU Law candidate at Somerville College, University of Oxford.

SUGGESTED CITATION: Íñiguez, G.; “Are football’s transfer rules caught by the Charter? AG Szpunar’s Opinion in FIFA v. BZ (C-650/22)”, EU Law Live, 03/05/2024, https://eulawlive.com/op-ed-are-footballs-transfer-rules-caught-by-the-charter-ag-szpunars-opinion-in-fifa-v-bz-c-650-22-byguillermo-iniguez/

Another Episode on Horizontal Direct Effect of Directives, Or: Who Should Clean Up the Mess? Case C-316/22 Gabel Industria

Tessile

Justin Lindeboom

Introduction

Gabel Industria Tessile once more exemplifies the Court of Justice’s continued efforts to confine the prohibition of horizontal direct effect of directives to its bare essentials, and to allow alternative legal pathways to protect rights of individuals derived from unimplemented directives (on the role of the Charter of Fundamental Rights, for example, see here). In this judgment, the Court develops two such alternate routes: the recent doctrinal innovation that national law may allow for horizontal direct effect of unimplemented directives, and the use of the principle of effectiveness as a limit to national procedural autonomy. The result is a pragmatic judgment that achieves a sensible outcome, while at the same time it adds to the complexity and messiness of the case law on direct effect of directives and its interaction with national procedural autonomy.

Facts of the case

This case involved a private dispute between two applicants, Gabel Industria Tessile SpA and Canavesi SpA, and two defendants, A2A Energia SpA and Energit SpA. Gabel and Canavesi sought repayment of a so-called ‘additional provincial tax on electricity excise duties’, which they had paid in 2010–2011, on the ground that this additional tax was contrary to EU law. Indeed, tax was repealed already in 2012. After the Court’s 2018 judgment in Messer France, the Italian Supreme Court of Cassation had concluded that the law introducing the additional tax was contrary to Directive 2008/118

The dispute between Gabel Industria/Canavesi and A2A/Energit was part of a series of litigation about the unduly paid taxes between the end of the transposition deadline of Directive 2008/118 – that is 1 April 2010 –and the moment that the additional tax was repealed on 1 April 2012.

The main legal complication in these cases is an Italian law that does not allow a final consumer to seek reimbursement of an unduly paid tax from the State. Instead, the consumer should bring a civil action against the taxable person; the latter may then apply to the State for reimbursement. Within the civil action between the consumer and the supplier, however, the prohibition of horizontal direct effect of directives bars the consumer from invoking Directive 2008/118 against the supplier.

Consequently, the referring national court asked the Court of Justice, firstly, whether the prohibition of horizontal direct effect of directives applies in a case where national law does not allow the plaintiff to seek reimbursement from the State directly, and secondly, whether the principle of effectiveness precludes a national rule that prohibits the consumer from seeking reimbursement from the State if the consumer cannot obtain a refund from the supplier because of the prohibition of horizontal direct effect.

The judgment of the Court of Justice

The Court’s judgment is concise; the substantive reasoning takes up only 18 paragraphs. The first question about the prohibition of horizontal direct effect of directives is answered in two parts.

First, the Court repeats the well-known rule that unimplemented directives as such cannot be relied upon against private parties (para. 22). EU law allows, however, a Member State to choose the form and methods of implementing a directive (para. 23). National law may therefore provide that sufficiently clear and unconditional provisions of an incorrectly transposed directive become part of the domestic legal order after the transposition deadline, such that they can also be invoked horizontally (paras. 24–25). The Court refers to this effect to paragraphs 32 and 33 of Thelen Technopark ‘and the case-law cited’, although, as will be discussed in more detail below, in reality this rule was an invention of Thelen Technopark’s itself.

Second, the Court refers to the Foster rule according to which an unimplemented directive can also be invoked, among others, against private parties that possess special powers beyond those which result from the normal rules applicable to relations between private parties (para. 26). The relevance of this paragraph is obscure at first glance: the preliminary questions do not mention or allude to the Foster rule. As we learn from Advocate General Emiliou’s Opinion (point 32), this issue was raised during the proceedings. I suppose the argument may be that the energy suppliers, in some way, perform a task in the public interest by ‘collecting’ an indirect tax from the final consumer, although it is of course more accurate to say that they are allowed to – but not required – to pass on the tax. In any event, the Court seems hardly interested in pursuing this line of argument, since it fully defers to the national court the task to ascertain whether the Foster rule is met, and leaves it at that.

The second preliminary question highlights the relationship between direct effect and procedural autonomy. The Court affirms the rule that a Member State is in principle required to repay charges levied in breach of EU law (para. 29). If the taxable person – i.e. the energy supplier in this case – has passed on the tax burden to the final consumer, the Member State may refuse reimbursement to avoid unjust enrichment of the taxable person (paras. 30–31). However, the final consumer must be reimbursed one way or the other, either by the Member State directly or by the supplier (para. 32). If reimbursement cannot be sought from the supplier because of the prohibition of horizontal direct effect, obtaining reimbursement from the State directly is the only available option. In those circumstances, a national law barring a final consumer from seeking reimbursement from the State directly is contrary to the principle of effectiveness (para. 36).

Horizontal direct effect based on national law: a pretended history

The assertion that national law may grant horizontal direct effect of an unimplemented directive is based on paragraph 33 of Thelen Technopark (in paragraph 23 of Gabel Industria, the Court mistakenly refers to paragraph 32), which states that the absence of an EU law requirement to apply a directive horizontally is ‘without prejudice […] to the possibility, for that court, or for any competent national administrative authority, to disapply, on the basis of domestic law, any provision of national law which is contrary to a provision of EU law that does not have such effect’. This rule is not supported by any case law reference, but the preceding sentence, affirming the absence of an EU law requirement of horizontal direct effect, refers to paragraph 68 of Popławski, which indeed holds that ‘a national court is not required, solely on the basis of EU law, to disapply a provision of its national law which is contrary to a provision of EU law if the latter provision does not have direct effect’.

To my knowledge, the latter formulation in Popławski is the first instance at which the Court frames the prohibition of horizontal direct effect of directives as the absence of an EU law requirement to this effect. The two are conceptually and normatively distinct, however, and the latter framing is an important clarification of the case law – which requires amendment of many EU law textbooks that typically refer to a ‘prohibition’.

This first analytical move in Popławski is followed by a second move in Thelen Technopark, where the absence of an EU law requirement of horizontal direct effect is turned into an express competence for a national court to allow for horizontal direct effect based on national law. In two steps, therefore, the case law has moved from an (often alleged) prohibition on part of EU law to apply unimplemented directives to the detriment of private parties, to a power of national law and national courts to do exactly that.

The practical consequences of these two moves depends largely on the ability and willingness of national courts to ground horizontal direct effect in national law. More generally, in my view, this case law has three important implications.

First, the absence of an EU law requirement of horizontal (and inverse vertical) direct effect is consistent with the rationale that the EU legislature lacks the power to create obligations for individuals with immediate effect in directives (see e.g. Faccini Dori). However, it is arguably inconsistent with the alternate rationale for the prohibition of horizontal direct effect based on legal certainty (see e.g. Wells). After all, a national law declaring that all sufficiently clear and unconditional provisions of incorrectly implemented directives become part of national law after the transposition deadline would hardly alleviate the legal uncertainty caused by horizontal direct effect of provisions not addressed to private parties.

The Thelen Technopark / Gabel Industria rule can be particularly detrimental to legal certainty if a Member State has not completely failed to implement a directive, but has incorrectly implemented the directive in a way that creates legitimate expectations for private parties. In such a situation, well-established case law on consistent interpretation bars a contra legem interpretation of national law (see e.g. Dansk Industri). Horizontal direct effect

based on national law, however, achieves the same result by requiring the national court to disapply the national implementing law and substituting the directive.

Moreover, while paragraph 23 of Gabel Industria specifically refers to ‘national legislation’ granting horizontal direct effect, paragraph 33 of Thelen Technopark more generally states that national courts may disapply, on the basis of ‘domestic law’, any national law contrary to a provision of EU law without direct effect. But that ‘domestic law’ might as well be a very generic provision confirming the supremacy of EU or international law, which could make the lack of horizontal direct effect illusory in some Member States.

This brings me to the second point: the competence for Member States to grant horizontal direct effect likely results in disparities between Member States in the application of directives. If Member States A, B and C allow national courts to grant horizontal direct effect to unimplemented directives, and Member States X, Y and Z do not, the applicability of directives may deviate among Member States not having properly implemented the directive. As we know from the Environmental Impact Assessment directive, for example, it is not unlikely that multiple Member States fail to implement a directive appropriately. No such problem arises with the prohibition of horizontal direct effect, which would always apply to all Member States.

Third, the rule in Thelen Technopark and Gabel Industria may lead to a normative contradiction if it is combined with the principle of sincere cooperation. In several judgments based on the latter principle, the Court inferred from the existence of a competence under national law a requirement under EU law to ensure the effectiveness of EU law (see e.g. Van Schijndel and Kühne & Heitz). If this case law were applied by analogy, a power for national courts under national law to grant horizontal direct effect implies an obligation under EU law to make use of this competence – while at the same time EU law itself may not require horizontal direct effect.

The principle of effectiveness: whose fault is it anyway?

As Advocate General Emiliou observed in point 56 of his Opinion, it remains unclear why Italian law requires first the final consumer to start a civil case against the supplier, and only then allows the supplier to seek reimbursement from the State. This seems laborious at the least.

Be that as it may, the Italian law is rightly assessed under the rules governing the procedural autonomy of the Member States, and the legal test is not whether the rules are laborious but whether they violate the principles of equivalence and effectiveness.

The crux is that the prohibition (sic!) of horizontal direct effect makes it legally impossible under EU law to obtain compensation by the supplier. So unless Italian law were to grant horizontal direct effect to the directive, this route is not viable. According to the Court, in that case Italian law must allow the final consumer to seek reimbursement directly from the State (paragraphs 36–37).

Consequently, either Italy abolishes the rule that final consumers cannot seek reimbursement from the State, or Italian law must grant horizontal direct effect of unimplemented directives. Since the former may result in all sorts of administrative bottlenecks, at least in the short term, the latter may be the most efficient option – and surely the Court was aware of this.

Interestingly, nowhere in paragraphs 33 to 37 does the Court recognise that the impossibility for a final consumer to obtain reimbursement is at least partly caused by the prohibition of horizontal direct effect. Instead, the Court attributes the problem entirely to Italian law. While both are, of course, necessary conditions for this impossibility, neither is a sufficient condition. On the one hand, the Court’s reasoning is methodical and the outcome is perhaps the most satisfactory one. At the same time, requiring Italian law to change its taxation laws as the result of an absurd implication of the horizontal direct effect case law – of which the Court had been warned as far back as the early 1990s – remains somewhat uncanny.

Concluding remarks

Gabel Industria is another example of how the prohibition of horizontal direct effect of directives continues to haunt the Court of Justice. It has made the Court’s jurisprudence ever more complex and has given rise to an ever increasing avalanche of scholarly theories (for an overview of some strands in the literature, see here). Gabel Industria provides two main contributions to this case law. It consolidates, firstly, Thelen Technopark’s rule allowing for horizontal direct effect based on national law, and with that the pretension – not unknown to the Court – that in fact the law has never been different. Secondly, national law should solve, where legally possible, the detrimental consequences of the horizontal direct effect case law. If the prohibition of horizontal direct effect has left the full effectiveness of a directive wanting, national law may be required to clean up the mess.

Justin Lindeboom is Associate Professor of Law at the University of Groningen.

SUGGESTED CITATION: Lindeboom, J.; “Another Episode on Horizontal Direct Effect of Directives, Or: Who Should Clean Up the Mess? Case C-316/22 Gabel Industria Tessile”, EU Law Live, 30/04/2024, https://eulawlive.com/op-ed-another-episode-on-horizontal-direct-effect-of-directives-orwho-should-clean-up-the-mess-case-c-316-22-gabel-industria-tessile-by-justin-lindeboom/

The will of

the

legislator and

the direct effect

of EU international agreements (Case C-382/21 P KaiKai Company

Luigi Lonardo

The judgment in KaiKai is exemplary of how the Court of Justice views the EU legal order. In the doctrine of the Court, EU law is an autonomous legal system, separate from international law. We know this from the line of cases which, beginning with Opinion 2/13, have recently given full expression to the principle originating with Van Gend en Loos. In this state of things, it is EU (primary) law that determines when a norm is part of the EU legal order. In the case of international agreements concluded by the EU, international law becomes part of the Union’s legal order by virtue of Article 216(2) TFEU. Further, some provisions of the EU legal order can confer rights directly on individuals. Except for freedoms protected at constitutional level (such as the four freedoms or the Charter rights), rights are conferred upon by virtue of the political process, i.e., when the EU legislature so decides. This is a reflection of the principle of democracy at EU level. When applied to an international agreement, this reasoning entails that its provisions may be directly invocable by individuals, but this happens if, and only if, the EU legislator so intended. KaiKai confirms as much. It also adds an important statement on the limits to the duty of consistent interpretation of EU secondary law in light of an international agreement. In this Op-Ed, I focus only on the question of the effects of international agreements. The procedural aspects of this case –one of the first cases having passed the ‘filtering of appeals’ mechanism of Article 58a of the Statute of the Court of Justice, have been commented by Luca de Lucia in EU Law Live.

The agreements at issue in the KaiKai case are the Paris Convention for the Protection of Industrial Property (‘The Paris Convention’) and the Patent Cooperation Treaty (‘PTC’). The Paris Convention provides that a person filing a patent in one of the countries where the Convention applies, has a right of priority for the purposes of filing in the other countries. The Paris Convention (Article 4(C)(1)) is phrased as follows: ‘the periods of priority […] shall be 12 months for patents and utility models, and 6 months for industrial designs and trademarks’. The PCT (Article 2(ii)) states that ‘references to a “patent” shall be construed as references to patents for inventions, inventors’ certificates, utility certificates, utility models, patents or certificates of addition, inventors’ certificates of addition, and utility certificates of addition’. According to Article 41(1) Community designs Regulation, ‘the Regulation’: ‘A person who has duly filed an application for a design right or for a utility model in or for any State party to [the Paris Convention], shall enjoy […] a right of priority of six months from the date of filing of the first application.

KaiKai turned on the interpretative question of whether ‘design and utility model’ in the Regulation includes patent (with priority right for 12 months under the Paris Convention) or if it excludes patents (priority right of 6 months under the Paris Convention). In other words, is there a contradiction between the Paris Convention and EU secondary law? If yes, how should it be resolved? In particular: does the Paris Convention have direct effect

in the EU legal order? Does it have the power to guide the interpretation of EU secondary law? And how much can the text of EU secondary law be stretched to conform with the Paris Convention (that is to say, what are the limits of such conform interpretation)?

The General Court found that there was no contradiction. Although the wording of the Regulation do not expressly refer to a right of priority claimed on the basis of a patent, the words ‘design rights or utility model’ must be given a broad interpretation in the light of the overall scheme of the PCT (paras. 49 and 50 of the judgment of the General Court). The provision of the Regulation would otherwise contain an ‘unjustified exclusion’ (para. 48 of the judgment of the General Court).

The appellant claimed that, by doing so, the General Court had given direct effect to the Paris Convention. Even admitting that the Convention has merely interpretative value, it argued, the General Court went one step too far when it read ‘patents’ where the Regulation says ‘design’ and ‘utility models’.

The Court of Justice reasoned as follows. The relevant section of the Paris Convention is part of the EU legal order because it was incorporated in the TRIPs Agreement, which was concluded by the EU (hence, by virtue of the operation of Article 216(2) TFEU). Therefore, the relevant provisions of the Paris Convention have the same effect as the TRIPs, that is, they do not have direct effect (this is settled case law, Dior and Others, C-300/98).

There are only two exceptions to the lack of direct effect of TRIPs: these are when the act of the European Union expressly refers to specific provisions of those agreements, and when the European Union intended to give effect to a specific obligation assumed under those agreements. Neither of these is material in the present case. How do we know when the EU legislature intended for an agreement to have direct effect? It must be ‘necessary to be possible to infer from the specific provision of EU law contested that it seeks to implement into EU law a particular obligation stemming from the WTO Agreements’ (para. 66). The Court, instead, says that the EU legislature wanted to do the opposite in the case of patents: the Regulation is ‘the expression of that legislature’s intention to adopt, in respect of one of the industrial property rights covered by that convention, an approach specific to the legal order of the European Union, by establishing a specific system of unitary and indivisible protection for Community designs on the territory thereof, of which the right of priority provided for in that Article 41 forms an integral part.’ (para 67). It is this intention of the legislature which confirms that there is no direct effect of those provisions.

It is true nonetheless, the Court adds, that the Regulation must be interpreted, as far as possible, in conformity with the Paris Convention and the PCT. Here, the Court found that the General Court did exceed the boundaries of what is permissible, even considering the duty of consistent interpretation. The Court of Justice considered Article 41(1) of the Regulation ‘exhaustive’ (para 77), because it refers to design and utility model, not to patents. Ubi lex voluit, dixit, ubi noluit, non dixit. The General Court instead found that the same provision contains an unjustified exclusion of patents. Absurda sunt vitanda.

It is the conception of the EU’s legal order briefly summarised at the beginning of this post – and in particular, the centrality given to the will of the legislator and consequent democratic legitimacy of the outcome of the political process – that enables the Court to choose the interpretative principle it did, contrary to what the General Court had found: a provision of an international agreement has direct effect if, and only if, the EU legislator so intended. Although the Court does not say it explicitly, the intention of the EU legislator in secondary law also acts as a limit to the duty of conform interpretation of that law to international agreements: once the intention is established, the Court cannot interpret it in a way that modifies what the legislator intended.

Dr Luigi Lonardo is Lecturer in Law at University College Cork, where he is also Acting Direct of the Centre for European Integration.

SUGGESTED CITATION: Lonardo, L.; “The will of the legislator and the direct effect of EU international agreements (Case C-382/21 P KaiKai Company)”, EU Law Live, 02/05/2024, https://eulawlive.com/op-ed-the-will-of-the-legislator-and-the-direct-effect-of-eu-international-agreementscase-c%e2%80%91382-21-p-kaikai-company-by-luigi-lonardo/

Judgment in Case C-605/21, Heureka Group:

a Commission’s decision must not be final for bringing an action for damages

Maddalen Martín Arteche

Introduction

The judgment of the Court of Justice of 18 April 2024 in the Heureka Group case (C-605/21) brings novelty to the case-law established in the Volvo and DAF Trucks case (C-267/20) and reiterated in the Deutsche Bank case (C-199/22) regarding the dies a quo of limitation periods for bringing actions for damages following a decision of the European Commission finding an infringement of Articles 101 and/or 102 TFEU. In the case at hand, the Court of Justice interpreted that whether the Commission Decision is final or not is irrelevant to determining when the limitation period begins to run.

The Heureka Group judgment enhances legal certainty. However, the rationale behind the judgment cannot be easily extrapolated to actions for damages brought following a decision of a national competition authority finding an infringement of Articles 101 and/or 102 TFEU. We would expect, therefore, that the determination of the dies a quo of limitation periods in the latter cases will continue to be a matter for discussion and a source of uncertainty.

Determining the dies a quo of limitation periods: between knowledge and proof of damage

The Heureka Group judgment further singles out actions for damages for infringements of Competition law. The peculiarities reach the limitation periods as well. As the Court of Justice found in the Volvo and DAF Trucks and Deutsche Bank cases, the full effectiveness of Article 101 TFEU requires that the dies a quo does not begin until the infringement has ceased and the injured party has the necessary information for bringing an action. Knowledge is presumed to have been acquired, in the absence of proof to the contrary, as of the date of publication of the summary of the Commission’s decision concerned in the Official Journal of the EU. Knowledge must not only be obtained but also and, most importantly, be proven. And proof is key to the success of actions for damages.

The actions resulting in the Volvo and DAF Trucks and Deutsche Bank cases were brought following two Commission decisions (the Trucks and Euribor decisions) that had become final for the defendants –who had not challenged the decisions. Conversely, the Google Shopping Decision of 27 June 2017, following which the Heureka Group brought its action against Google before the Czech courts, has not yet become final. The appeal brought by Google and its parent company Alphabet against the judgment of the General Court of 10 November 2021 (C48/22) is still pending.

The fact that the Google Shopping Decision is not final does not alter the case-law laid down in the Volvo and DAF Trucks and Deutsche Bank cases. That is because, according to the Heureka Group judgment, the presumption

of legality that Commission decisions enjoy as long as they have not been annulled or withdrawn, their full and immediate effectiveness until the Court has decided to stay their enforcement (para. 73), and the probative value that Article 16(1) of Regulation No 1/2003 ascribes to Commission decisions even if they are not final (para. 74) alleviate the burden of proving the existence of an infringement (and even the damage resulting from the infringement) that lies with the injured party. Ultimately, the effectiveness of Articles 101 and 102 TFEU is maximised. However, the principle of effectiveness, the flagship of actions for damages resulting from infringements of Articles 101 and 102 TFEU, does not go so far as to require limitation periods to be suspended until the moment the Commission’s decision becomes final.

It follows from the Heureka Group judgment that the determination of the dies a quo of limitation periods has ceased to be purely a matter of survival of actions for damages. It is also oriented towards maximising the chances for successful actions. However laudable the aim to ensure the full effectiveness of Articles 101 and 102 TFEU may be, the fact is that the link between the knowledge required to bring an action for damages and the binding effects of Commission decisions (even if they are not final) upon national courts makes it challenging to extrapolate the developments in the Heureka Group judgment to actions for damages brought following a decision of a national competition authority. Even if, under national law, decisions adopted by national competition authorities are presumed to be legal and immediately enforceable, Article 9 of the Damages Directive, as stated in the Heureka Group judgment (para. 74), and Article 101 TFEU, as interpreted in conjunction with the principle of effectiveness in the Repsol Comercial de Productos Petrolíferos judgement of 20 April 2023 (C-25/21), only attribute probative value to decisions of national authorities when they become final. The latter distinction between decisions adopted by the Commission and national authorities did not, however, prevent Advocate General Kokott from taking the view in her Conclusions in case Heureka Group that ‘[…] knowledge of the information indispensable for bringing the action is acquired at the time of publication of the summary of the Commission’s decision in the Official Journal (or its equivalent in the case of a decision of a national competition authority)’ (point 128).

Conclusion

Waiting until a decision adopted by a national competition authority becomes final before filing a claim in a request for damages would add further complexity and uncertainty to the private enforcement of Articles 101 and 102 TFEU, which could be avoided if the dies a quo coincided with the date of publication of the national decision concerned. Indeed, it would lead to the multiplication of the dies a quo of limitation periods depending on whether the addressees of the national decision have challenged or not the decision and on the content of their appeals against the decision. By way of example, vis-à-vis the beneficiaries of the leniency programme who do not appeal the decision, the decision would become final at the date of publication. Would the answer be different where a leniency beneficiary merely appeals the legality of the fine? When would the limitation period start to run vis-à-vis the addressees not having participated in the leniency programme? Would an appeal challenging the personal participation of the addressee in the infringement and an appeal challenging the legality of the whole decision be treated equally?

Fortunately, a reference for a preliminary ruling originating from a Commercial court in Zaragoza (Spain) is pending before the Court of Justice (C-21/24). In the third question referred, the Spanish judge asks the Court of Justice whether the publication of the full penalty on the official, public website of the competition authority should be treated as equivalent to the publication of the summary of the Commission’s decision in the Official Journal of the European Union for the purposes of the limitation period. The answer to the latter question will hopefully clear up any doubts that remain after the Heureka Group judgment.

SUGGESTED CITATION: Martin, M.; “Judgment in Case C-605/21, Heureka Group: a Commission’s decision must not be final for bringing an action for damages”, EU Law Live, 29/04/2024, https://eulawlive.com/op-ed-judgment-in-case-c-605-21-heureka-group-a-commissions-decision-must-not-befinal-for-bringing-an-action-for-damages-by-maddalen-martin-arteche/

Maddalen Martin Arteche is an associate lawyer at a law firm in Madrid.

Excise goods accidentally lost during a denaturing process of ethyl alcohol shall not be considered as a release for consumption (Case C-509/22 Girelli Alcool)

Mariya Senyk

According to Council Directive 2008/118/EC, which establishes the general arrangements for excise duty (hereinafter – the ‘Directive’; now replaced by Council Directive 2020/262), excise duty becomes chargeable when excise goods are released for consumption, which entails any departure from a duty suspension arrangement, including irregular departure. The total destruction or irretrievable loss of excise goods under a duty suspension arrangement is normally treated as a release for consumption. Article 7(4) of the Directive provides for three derogations where no release for consumption occurs, namely when the destruction or loss is caused by (i) the actual nature of the goods, (ii) unforeseeable circumstances or force majeure, or (iii) as a consequence of authorisation by the competent authorities of the Member State. Italian legislation grants excise duty relief in the event of a non-serious fault resulting in the loss of excise goods (except for manufactured tobacco), equating it with ‘unforeseeable circumstances and force majeure’.

In the present case, C-509/22, Girelli Alcool, an Italian company is carrying out ethyl alcohol denaturing operations, a process that renders it unsuitable for consumption. Denatured ethyl alcohol is generally exempt from excise duty (Article 27 of Directive 92/83/EEC). During the denaturing process in the presence of the customs agency official, a part of pure ethyl alcohol was irretrievably lost due to a leak caused by the negligence of the operator’s employee. The company applied for an excise duty exemption in respect of the lost product, but the customs authorities denied it on the ground that the loss happened because of carelessness and fault of the company’s employee, rather than unforeseeable circumstances or force majeure as claimed by the company. The company challenged this decision in court, and after several instances, the case was finally brought to the Italian Supreme Court of Cassation, which requested a preliminary ruling from the Court of Justice.

The first two questions concerned the interpretation of ‘unforeseeable circumstances’ in the meaning of Article 7(4) of the Directive, which had not yet been subject to interpretation in the context of excise duties. According to the Court of Justice, ‘force majeure’ and ‘unforeseeable circumstances’ are autonomous concepts of EU law and must be interpreted strictly, as they constitute a derogation from the general rule. Referring to its previous case law (SPMR, C-314/06, para. 31), the Court of Justice held that the concept of ‘force majeure’ for the purposes of Article 7(4) of the Directive refers to abnormal and unforeseeable circumstances extraneous to the party by whom it is pleaded (objective element), the consequences of which, in spite of the exercise of all due care (subjective element), could not have been avoided. The Court of Justice concurred with the Advocate General (AG) and concluded that the concept of ‘unforeseeable circumstances’ should be interpreted similarly. In the

present case, neither the objective nor the subjective elements of ‘unforeseeable circumstances’ were fulfilled, as the loss occurred within the company’s sphere of responsibility and was a result of a failure to exercise due care (Girelli Alcool, C-509/22, para. 60).

The Court of Justice also found that the Italian implementation of Article 7(4) of the Directive, whereby any nonserious fault is treated as ‘unforeseeable circumstances and force majeure’, contradicts the Directive. This cannot be justified based on the derogation for ‘authorisation by competent authorities’ either. According to the Court of Justice, the latter refers to administrative decisions made in individual cases, not to a power of the legislature to establish general categories distinct from those given in Article 7(4) of the Directive. Furthermore, the Court of Justice held that the denaturing operation resulted in the total destruction of ethyl alcohol by making it ‘unusable as a product subject to excise duty’. Therefore, a loss of the product during such operation, which itself was subject to prior authorisation by the competent authorities, must be deemed to have occurred ‘as a consequence of authorisation by the competent authorities of the Member State’ and must not be treated as a release for consumption within the meaning of Article 7 of the Directive.

The present judgment implies that the conditions for chargeability of excise duties must be identical in all Member States, preventing them from establishing additional derogations not prescribed by the Directive. The Court of Justice’s conclusion about granting an excise duty relief based on the existence of a prior authorisation for a denaturing process differs from the approach of the AG and the Commission in the case. It raises a question whether the Court of Justice has broadened the scope of ‘authorisation by competent authorities’ derogation beyond its intended purpose. Such a broad interpretation of this derogation may lead to situations of fraud and abuse, which the Directive seeks to prevent.

Mariya Senyk is a senior lecturer at the Faculty of Law of Lund University.

SUGGESTED CITATION: Senyk, M.; “Excise goods accidentally lost during a denaturing process of ethyl alcohol shall not be considered as a release for consumption (Case C-509/22 Girelli Alcool)”, EU Law Live, 03/05/2024, https://eulawlive.com/analysis-excise-goods-accidentally-lost-during-adenaturing-process-of-ethyl-alcohol-shall-not-be-considered-as-a-release-for-consumption-case-c-509-22-girelli-alcool-by-mariya-se/

SYMPOSIUM

COMPETITION CORNER:

SYMPOSIUM ON COMPETITION LAW AND REGULATION

The case of EU telecoms – past and future

Martin Cave

Compared with certain other well-known network utilities – energy, rail and water – the telecoms sector has long been recognised as being more amenable to competition across its value chain, perhaps because it is less capital intensive than the others, and the unit costs (particularly electronic and software costs) of inputs actually go down by significant percentages each year. Indeed the inventor of price cap (RPI-X) control of UK telecoms 40 years ago, Stephen Littlechild, prophetically looked forward to it not being needed for long, since its task would be assumed by competitive processes.

The chief instrument by which that goal has largely been reached in the EU was a set of Directives which came into effect in 2003. After a series of non-trivial but not monumental changes, they were re-christened the European Electronic Communication Code 2018. But now a more consequential rewrite is in train, illustrated by the recent publication in February of an EC White Paper entitled ‘How to master Europe’s digital infrastructure needs.’ This is widely expected to prefigure, when the new EU parliament and commissioners are in post, further changes in legislation for the sector’s regulation.

What follows briefly describes the EU’s experiences of the past twenty years of telecoms network regulation; makes some observations on the content of the White Paper; and suggests a means of identifying what an imaginative new regime might have to include if it is to have a chance of matching the ‘twenty-years and counting’ longevity of its predecessor.

The effect on EU network competition of the 2003 Directives. The stated long-term goal of the Directives was to take the sector to a place where anti-monopoly regulation was not needed, and competition law could take over. To do this it created an ersatz (forward-looking) version of dominance, called significant market power. In each MS, a finding of SMP in a number of pre-specified markets exposed the relevant operator to the most severe remedy, the unbundling by the NRA of the firm’s relevant network assets to competitors at a regulator-determined access prices.

The access prices to different bundles of assets could then be ruthlessly manipulated to promote further investment by competitors and pare down the scope of the access products demanded. And the imposition of sunset clauses on the regulation of any access or retail product ensured that whenever competition emerged, regulation ceased. The regulatory process involved a complex but workable division of labour between the EC and NRAs, usefully mediated by BEREC, the ‘college’ of national regulators.

This regime was successful to the extent that recent analyses of Member State national markets have found SMP in only two of the eighteen markets originally identified – namely, the wholesale distribution networks for services

to households and firms. Moreover, this regime operated on top of a fundamental and unprecedented process in which fibre began quickly to replace copper as the main vector in the fixed local loop; it also saw in three successive generations of the already replicated radio access networks of mobile operators.

The content of the White Paper. The White Paper and the conclusions reached from it will be passed on to the succeeding Parliament and Commission later in 2024. It is, however, a formidable document, which brings together the progress on digital transformation made so far by the current Commission. In assessing the state of the sector, it finds a need to increase the availability of capital to the sector, to deliver the considerable future network investments which are needed to achieve the EU’s objectives to 2030 and beyond. There is also a substantial focus on the technological leap forward needed to fulfil those objectives, to be achieved by carefully designed programmes for identifying and realising new techniques. Many pages are devoted to this issue, and to the complex range of schemes available. The White Paper’s observations on extending the single market in telecommunications and on the approach to mergers in the sector have attracted considerable attention, but are not discussed further here.

However, the White Paper – no doubt intentionally - does not attempt a full ‘drains up’ specification of the next regulatory regime, the passages on this issue being somewhat backward-looking and incomplete. It seems highly desirable that this analysis should now be undertaken.

The next communications regulatory regime. The remaining paragraphs give a thumbnail sketch of how competition law and regulation in general have developed over recent years, and enumerate a couple of the key possible dimensions of a new approach – without at this early stage in the proceedings identifying any preferred option.

Given the growing competition in telecoms markets, one obvious option is to choose in future to rely broadly on EU competition law (except on telecoms-specific technical provisions). What might possibly help to sustain this view is the argument made in a recent book by Pablo Ibanez Colomo of the London School of Economics (the New EU Competition Law 2023, ch.1), that the passage of Regulation 1/2003 (on implementing Articles 101 and 102 of the Treaty) enabled the European Commission to extend its scope of competition law activity to ‘market-shaping’ or regulatory-like activities. In this view, enforcement became policy- or end state-driven, rather than law-driven. Few cases of this kind have emerged in the telecoms sector, compared say with energy, possibly because telecoms had its own specific market-shaping procedures described above.

Regulation has also grown, if less obviously, in its proclivity for intervention - especially by legislatures and governments, which stand above NRAs in the food chain of regulatory governance. This may be driven by the increasing political salience, in hard economic times, of how network regulation affects retail prices, and by the growth of new EU goals such as net zero carbon emissions. Thus regulators are no longer guided by timeless injunctions (such as ‘be nice to customers’), but are increasingly given express quantitative targets to achieve, such as universal gigabit connectivity by 2030. This predictably ratchets up ex ante interventions.

The term ‘pro-competition regulation,’ which emerged in particular in discussion of the Digital Markets Act and similar measures, covers some of these trends. It may connote the emergence of some ‘weighted average’ of competition law and regulation. If so, one key property of any such regime is likely to be: what component of competition law is appropriated? In the 2003 Directives, it was a revised version of dominance – significant market power or SMP- which played that role. But it was not the only one available and considered: one possible alternative is to hang regulatory interventions on a finding of ‘bottlenecks’ (a half-sibling of competition law’s ‘essential facilities’). This has the advantage of flexibility, especially if the nature of the value chain is complex and unpredictable. Remember that in certain circumstances, ownership of a unique bottleneck in any value chain can in principle confer an ability to suck out all the excess profits associated with customers’ willingness to pay for the final product or service; also, two similarly endowed firms can collusively generate the same result.

The second dimension is the scope of application of the approach. Choosing and amending that was a major part of the 2003 regime, where relevant markets were regularly rechosen. Digitalisation, AI and other developments are introducing huge changes in the value chain of the communications sector. An issue discussed in the White Paper is what to do about the cloud, already the object of multiple inquiries by global competition authorities. However, the virtualisation/softwarization of communications switching has led to its cloudification. This illustration of ‘delayering’ might in extremis cause the mobile sector to be turned into a set of spectrum-licensed retail operators each of which owns a few antennae perched on a rented tower and connected by leased backhaul which takes all the necessary data to and from the cloud. The inevitable question is: should this new technical embodiment of traditional network activity be regulated at all, or if so, how?

Wider changes are occurring. Audio-visual services are an example. In content generation, AI wizardry now makes it possible not only to dub the voice-track from one language to another, but also to alter the visuals to lip-synch, with appropriate facial expressions, the new spoken words. This has considerable potential to promote international trade both within the Single Market, and outside the EU.

There are also additional multi-mode delivery options in use or coming into use - by DTT, geo-stationary and low-earth orbiting satellites, fibre or other fixed networks, mobile networks, etc.

In content aggregation and retailing, linear (scheduled) broadcast services are rapidly giving way to streaming, financed both by subscription and in the form of free ad-supported streaming services, known as FAST; and the way in which such personalised digital advertising is sold is under investigation in many jurisdictions. Streaming confers increasing returns to scale on the few players with the most subscribers, such as Netflix, Amazon Prime and Disney+, whose market shares may be beginning to show the characteristics of a dominant oligopoly.

Moreover social media, following Tik-Tok’s example, are now changing their offering: Facebook’s recent improved commercial performance is based on a switch from ‘family and friends’ postings and news consumption to viewing short videos, presented to users largely based on their individual characteristics. Google’s You-Tube is very active in this space too.

In competition law, the notion of a digital ecosystem has emerged to describe situations in which, as the digital sector is increasingly dominated by a small number of firms operating in a set of vertically-related markets, adverse effects on customers can be enhanced by the cumulative effects of such amalgamations. This notion has penetrated competition law analysis of mergers and the Commission’s recent Market Definition Notice. Its existence may also affect consideration of the question discussed above, which is what activities should be covered by the intended regulatory instrument.

What this discussion has surfaced is that omitting some activities from the scope of any forthcoming Regulation carries some risks, as does making it so comprehensive as to regulate everything that moves in a very dynamic sector. Building on an aspect of the 2003 Directives, this dilemma might be resolvable by having an initial list of markets/activities covered, which can be added to or subtracted from as things develop, and/or by having strict criteria for the application of regulation.

Finally and very briefly, any wholesale revision of the regulatory framework must confront the vexed question of who (among the Parliament, the Commission, the NRAs, or other European bodies) does what? The White Paper’s case for further centralisation of spectrum assignment and allocation looks very strong – but note the parallel issue of who keeps the auction money. This issue is intimately related to the potential ‘single market’ impact of the new regime, which I do not have space to consider here.

In summary, there are numerous vitally important economic and social issues for the EU at stake in this discussion. The famous ‘Brussels effect’ may spread whatever the EU chooses to do even more widely, as is currently happening with the DMA. It seems to me that reaching good decisions requires as full a consideration as is possible of all the issues involved, and an initially open mind over where the argument might lead.

Martin Cave, visiting Professor, London School of Economics

SUGGESTED CITATION: Cave, M.; “The case of EU telecoms – past and future”, EU Law Live, 02/05/2024, https://eulawlive.com/competitioncorner/the-case-of-eu-telecoms-past-and-future-by-martin-cave/

Revitalising the EU Postal Market: Lessons from Telecom’s Competitive Edge

Mateusz Chołodecki

This text explores the transformative potential of adopting pro-competitive regulations within the postal market, drawing inspiration from the telecommunications sector’s evolution, mainly through the European Electronic Communications Code 2018/1972 (‘EECC’) lens. It proposes key regulatory reforms aimed at ensuring accessibility and maintaining competitiveness in the face of the e-commerce boom and changing consumer demands.

Parallel between Postal and Telecom Markets

The evolution from monopolistic control to competitive markets through privitisation has profoundly reshaped the landscape of the EU’s postal and telecommunication sectors, though their paths diverge in pace and regulatory approach. Historically, these industries were dominated by state monopolies, with a single entity monopolising both postal and telecommunication services. This arrangement, deeply entrenched within public administration, granted exclusive rights and maintained the status quo well into the late 20th century. However, the advent of liberalisation in the 1999s began dismantling these monopolistic structures, steering these sectors towards a more open and competitive marketplace.

In this transformative journey, the telecommunication sector emerged as a frontrunner, capitalising on digital transformation and technological innovation. The EU was instrumental in setting the stage for a harmonised and competitive market ecosystem underpinned by a pro-competitive regulatory framework. This framework was meticulously crafted to remove barriers to entry and cultivate a competitive environment. The telecom sector witnessed the introduction of sector-specific regulations, including ex-ante obligations, which facilitated access to essential facilities previously monopolised, thereby invigorating competition and fostering innovation.

In contrast, the postal sector’s march towards liberalisation has been characterised by caution and gradualism. The overriding aim here was not just to fuel competition but to ensure the continuation of the universal service obligation (‘USO’) and, by that, to protect incumbent operators. This is evidenced by EU cases concerning postal incumbents, such as Deutsche Post I (C-399/08), Post Danmark I (C-209/10), and Post Danmark II (C-23/14). Such protective measures resulted in a regulatory landscape where the courier, express, and parcel (‘CEP’) market enjoys complete freedom from stringent regulatory oversight by postal National Regulatory Authorities (‘NRAs’). While the Postal Service Directive (97/67/EC, amended by Directives 2002/39/EC and 2008/6/EC) successfully lifted barriers to market entry, they concurrently aimed to preserve the critical role of universal service providers (‘USPs’), thus marking a clear division between traditional postal services and the dynamic CEP segment.

Numerous postal incumbents capitalise on the liberalisation wave, expanding their reach into the CEP market by establishing specialised courier subsidiaries, like DHL, GLS, or DPD (GeoPost).

This dichotomy underscores a deeper understanding of the postal market’s inherent challenges, particularly the imperative to sustain traditional services amidst dwindling mail volumes and the rapid growth of e-commerce. Nevertheless, it simultaneously reveals a stark contrast in regulatory philosophies when juxtaposed with the telecommunication sector, which embraced a more pro-competitive stance from the outset. This variance highlights the unique trajectories of these two critical sectors and the potential for regulatory strategies to adapt and evolve in response to changing market dynamics and technological advancements.

The Case for Pro-competitive Regulation in Postal Services

By leveraging the transformative journey of the telecommunications sector, there is a strong argument for embracing pro-competitive regulations within the postal market. The telecommunications industry’s shift toward liberalisation, characterised by the breakdown of monopolies and the promotion of competitive practices, has spurred remarkable gains in efficiency and innovation. This narrative offers a compelling model for the postal sector, especially relevant today, as the e-commerce boom and the corresponding decline in traditional mail volumes reshape the market landscape.

Adopting a pro-competitive regulatory stance in the postal sector promises substantial benefits. Competition fuels innovation, motivating entities to elevate service quality, cut costs, and forge new products and services that meet changing consumer demands. For the postal sector, innovation is not merely advantageous but essential. The burgeoning e-commerce sector necessitates a postal infrastructure that is both adaptable and efficient, capable of managing the growing volume and diversity of parcel deliveries. Furthermore, as the volume of traditional mail wanes, the future of the USO depends on the sector’s ability to evolve and tap into new sources of revenue.

Nevertheless, the current regulatory framework governing the postal sector, especially the CEP market, falls short of fully capitalising on competition advantages. The dominance of operators like Deutsche Post/DHL in Germany and InPost in Poland, each holding substantial market shares and boasting the country’s largest networks of automated parcel machines (’APM’) and ‘Pick Up, Drop Off’ (‘PUDO’) locations, call to mind the telecom sector’s pre-liberalisation scenario. The robust demand for APMs creates substantial barriers for newcomers, echoing past telecom challenges. The telecom industry’s response—sector-specific regulations to democratise access to infrastructure and stimulate competition—offers a roadmap for the postal sector. The postal sector could cultivate a more competitive and dynamic market by easing entry barriers and fostering infrastructure sharing, such as APMs or PUDOs.

Drawing parallels with the telecom industry’s regulatory evolution underscores the potential impact of integrating pro-competitive regulations within the postal market. These adjustments could propel the sector towards more significant innovation, service quality, and efficiency, benefiting established operators and potential new market entrants.

Learning from Telecoms

Drawing lessons from the EU telecommunications sector’s comprehensive liberalisation and regulatory progression offers invaluable insights for the postal market’s transformation. The liberalisation of the EU telecom market ignited a shift in market dynamics and endowed NRAs with significant regulatory authority. These powers played a crucial role in cultivating a competitive, innovative market focused on consumer interests. The newest adoption of the EECC was pivotal in this evolution, marking a substantial reform of the EU’s telecommunications regulatory framework.

The EECC introduced broad and adaptable definitions, expanding the understanding of telecommunication services. This approach promoted flexibility and a capacity to evolve alongside technological progress, ensuring the regulatory framework’s relevance in an increasingly digital era. Additionally, the EECC upheld a robust pro-competitive orientation, aligning regulatory goals to encourage competition, to facilitate market entry and expansion, and, ultimately, to improve consumer offerings.

Key features of the EECC that underline its pro-competitive objectives include:

1) Promotion of competition: The Code explicitly aims to enhance efficient infrastructure-based competition, creating a level playing field for both new and existing telecom operators. This environment is designed to spur innovation and afford consumers access to a wide array of quality services.

2) Universal Service Modernisation: The EECC reaffirms the commitment to universal service, updating this principle to guarantee access to high-speed internet for all citizens, acknowledging its fundamental role in today’s society.

3) Regulatory Agility: It empowers NRAs with the flexibility to adjust regulatory actions in response to market shifts, ensuring that the regulatory landscape is conducive to sustaining competition.

By drawing on the EECC’s successes, applying similar regulatory strategies and authorities to the postal sector could trigger a vital reform. Specifically, by embracing open definitions, advocating for competition, modernising the universal service obligation, and providing NRAs with the agility to confront emerging challenges, the postal market can progress towards a landscape marked by competitiveness and innovation. This evolution would better serve the contemporary needs of consumers and businesses, paving the way for a more dynamic and digitalforward postal sector.

Proposed Changes for Postal Regulation

The postal market’s regulatory framework is at a critical turning point. The rapid growth of e-commerce and evolving consumer expectations necessitate a postal system that is both innovative and adaptive. The postal industry can also leverage regulatory instruments aimed at fostering competition. Proposed reforms for postal regulation should focus on lessons learned from telecommunications regulatory experience:

1. Facilitating Access to Postal Infrastructure: Granting new market entrants easier access to postal infrastructure, such as sorting centres, delivery networks, and last-mile solutions like APMs and PUDO points, is critical. This approach would diminish barriers to entry, stimulating innovation and competition within the postal ecosystem.

2. Revitalising the USO: The USO must be reimagined to meet the digital era’s demands. Expanding the USO to include digital services would not only ensure the continued relevance and accessibility of postal services but also address the needs of those digitally underserved or choosing to exercise their digital rights by opting out of internet use. This modernisation could extend to e-government services and digital communication tools, ensuring the USO adapts to and reflects the necessities of a digital society while still considering the preferences of those who wish to remain offline. USO must ensure that no one is left behind as services evolve..

3. Ensuring Equitable Market Conditions: The prevailing market conditions often skew in favour of established incumbents, particularly within the CEP segment, where entities like DHL, DPD (GeoPost), and InPost benefit from their extensive networks. Regulatory actions should aim to level the playing field, ensuring fair competition among all postal and delivery service providers. This might include measures to curb anti-competitive behaviours, promote shared use of infrastructure, and enforce transparency in pricing and access conditions.

Implementing these pro-competitive regulatory measures would herald a transformative postal sector era marked by heightened innovation, operational efficiency, and service quality. Such reforms are essential to accommodate the e-commerce sector’s growth, ensuring the postal system’s enduring significance in the global communication and delivery landscape. Through thoughtful regulatory evolution, the postal industry can strike a harmonious balance between maintaining the USO and fostering the competitive zeal characteristic of the telecommunications revolution.

Conclusion

The postal market is navigating unprecedented transformation, driven by the rapid expansion of e-commerce and evolving consumer expectations. The journey of the telecommunications sector, particularly the implementation of the EECC, offers valuable lessons for reimagining postal regulation. By adopting a pro-competitive regulatory stance, the postal sector can foster an environment ripe for innovation and competition, ensuring it remains responsive to the digital age’s demands.

Key proposals for regulatory reform in the postal market include facilitating access to infrastructure, modernising the USO to encompass digital services, and ensuring a level playing field for all market participants. These measures are designed to lower entry barriers for new entrants and ensure that postal services remain accessible and relevant to all segments of society, including those digitally excluded.

As the postal market stands at this critical juncture, it is imperative to seize the opportunity to craft a regulatory framework that balances the need for competition with the mandate to provide universal service. Embracing the competitive dynamism revitalising the telecommunications sector can propel the postal market towards a future marked by innovation, efficiency, and enhanced service delivery. Through thoughtful regulatory evolution, the postal sector can meet the challenges and opportunities of the e-commerce era, ensuring its vital role in the global communication and delivery ecosystem for years to come.

Mateusz Chołodecki, PhD, serves as the Head of the Postal Market Laboratory within the Centre for Antitrust and Regulatory Studies (CARS) at the University of Warsaw. Specialising in postal, telecommunications, and ICT regulations, his research focuses on the increasingly convergent nature of these fields.

SUGGESTED CITATION: Chołodecki, M.; “Revitalising the EU Postal Market: Lessons from Telecom’s Competitive Edge”, EU Law Live, 29/04/2024, https://eulawlive.com/competition-corner/revitalising-the-eu-postal-market-lessons-from-telecoms-competitive-edge-by-mateusz-cholodecki/

THE LONG READ

The direct effect of CFSP norms in light of Common Position defining common rules governing the control of exports of military technology and equipment

Alina Carrozzini 1

I. Introduction

On the 12th of February 2024, the Court of Appeal of The Hague ruled that the Netherlands is under an obligation to cease the export of F-35 parts to Israel given the existence of a clear threat of International Humanitarian Law (IHL) violations by the latter in Gaza. This appeal, brought by three NGOs, represents yet another example of the growing civil society engagement with States’ military export policies.2 In this case, the applicants contested the Netherlands’ practice of issuing licenses for weapons on the basis of, inter alia, Council Common Position 2008/944/CFSP (the ‘Common Position’), a legal instrument setting common rules governing control of exports of military technology and equipment referred to in the EU Common Military List. This contribution assesses a legal question raised by the State in the context of these proceedings, i.e., whether the Common Position may be invoked before a national court or whether it has direct effect. Although this question was not answered by the Court of Appeal – as discussed below – this author takes the view that it may in principle be answered affirmatively. The Common Foreign and Security Policy (‘CFSP’) – the policy context within which the instrument was adopted – may be governed by special rules, but these do not necessarily prejudice the possibility to invoke CFSP norms before national courts if these are binding and can affect the normative framework of a given case.

II.Preliminary Remarks on the Necessity of the Enquiry

As anticipated, the question of direct effect was not decisive in this case: reliance on the Common Position could be made indirectly, given that the applicable national instrument – the Strategic Goods Decree (BSG) – subjects the granting of licenses to compliance with international obligations (Arts. 5(4) and 11(3) BSG) and thus, to the Common position and the Arms Trade Treaty (ATT) (paras. 5.30-5.34 of the Judgment). The reasoning of the Court of Appeal is consistent with the duty of conform interpretation, which mandates that national law must interpreted as far as possible in light of EU Law. Why should direct effect be discussed then? Simply put, because the duty of conform interpretation has limits, and notably cannot lead to a contra legem reading of national law. And States may fail to adopt implementing measures, or may do so in a way that forecloses a conform interpretation.

1. Lecturer in EU law, VU Amsterdam; PhD Candidate, Centre of European Law, King’s College London. a.i.carrozzini@vu.nl.

2. Exports to Saudi Arabia, for example, have come under scrutiny before, specifically, the UK High Court of Justice; the Belgian Conseil d’Etat; and an Italian court

A quick review of the 25th Annual Report on compliance with Common Position 2008/944/CFSP reveals this is not an unfounded concern: according to this instrument, twenty Member States (‘MS’) have not updated their implementing measures since the last amendment of this instrument (2019);3 for some, implementation information is even missing or revealing partially overlapping measures.4 There is, in other words, potential for an uneven application of the rules set within the Common Position, a potential which has sadly been underlined by targeted studies.5 Understanding whether direct effect is possible could improve consistency in this field, not the least because any incompatibility between a national measure and a CFSP norm cannot be resolved by a national judge via the principle of primacy where that norm does not possess direct effect.6 The fact that, at present, some Member States are taking steps to amend laws applicable to weapons export regulation and decrease transparency7 is evidence, in my opinion, of the critical need for increased oversight in this field. In this light, and given that the instrument provides an obligation on MSs to consider license denials issued by other MS (Art. 4), it seems worth elaborating on the question whether legal persons in other MS may rely on such an instrument directly.

III. Direct Effect and the CFSP

The starting point of this discussion is that the Common Position is a pre-Lisbon instrument with a CFSP legal basis (Art. 15 Nice TEU, now Art. 29 TEU)8, and the question whether CFSP norms have direct effect is tendentially answered in the negative. This assessment pertains to the view that the CFSP is ‘lex imperfecta’9: it is subject to special rules and procedures, which influence (and limit) the type of acts and remedies available in this field (Art. 24 TEU). Most importantly, the adoption of acts which produce effects upon individuals – to the exclusion of restrictive measures10 – has been contested.11

However, direct effect is neither a ‘rule’ applicable to the CFSP, nor a ‘special procedure’. To the contrary, it concerns the ability to invoke before national courts provisions of EU law which are sufficiently clear, precise

3. Twenty-Fifth Annual Report according to Article 8(2) of Council Common Position 2008/944/CFSP defining common rules governing the control of exports of military technology and equipment, Doc. No. 16605/23, pp. 52-61.

4. E.g. Malta, Slovenia.

5. M. Bromley, ‘The Review of the EU Common Position on Arms Exports: Prospects for Strengthened Controls’ SIPRI Non-proliferation paper No. 7, 2012, p. 7.

6. Judgment of the Court (Grand Chamber) of 24 June 2019, Poplawski, (Case C-573/17, EU:C:2019:530, paras. 59-64).

7. Rete Italiana Pace e Disarmo ‘Il Senato approva modifica peggiorativa della legge su export di armi: mobilitazione di Rete Pace Disarmo in vista del passaggio alla Camera’, 22 February 2024. See also A. Carrozzini, ‘Cosí Chi Vende Armi Stará Piú Sereno’, 17 March 2024.

8. The provision currently empowers the Council to adopt decisions (and no longer common positions) defining the Union’s approach to a particular matter.

9. Advocate General Wahl’s Opinion of 7 April 2016 in H v Council (Case C-455/14 P, EU:C:2016:212, point 38).

10. On the possibility of direct effect for restrictive measures, see R. Gosalbo Bono, ‘Some Reflections on the CFSP Legal Order’ 43(2) Common Market Law Review, 2006, p. 378; C. Eckes, ‘The CFSP and Other EU Policies: A Difference in Nature?’ 20(4) European Foreign Affairs Review, 2015, pp. 539-540.

11. Opinion in H v Council, point 37.

and unconditional. It is as such a concept which is concerned with the legal effects of that particular act (or provision thereof), not the circumstances or procedures leading to its adoption. Further, direct effect is a judgemade concept which is neither foreseen nor precluded (as such) by the Treaties. A prater legem interpretation supports, if anything, the opposite conclusion in relation to the CFSP, as judicial review is only limited before the Court of Justice (Art. 24 TEU); Member States are still under an obligation to ensure effective legal protection “in the fields covered by Union law” (Art. 19 TEU).

Most importantly, provisions do not need to address individuals or expressly confer rights to have direct effect (subjective direct effect). To the contrary, direct effect has equally been granted to EU law provisions because they are capable of being invoked (objective direct effect).12 Building on this, De Witte13 and Prechal14 argued that direct effect is, simply put, ‘the obligation of a court or another authority to apply the relevant provision of [EU] law, either as a norm which governs the case or as a standard for legal review.’ This last criterion, in turn, can be achieved by the express conferral of rights, but also the insertion of an obligation on MS as to particular conduct.15

Thus, the special status of the CFSP cannot be a reason to discount direct effect a priori: if the CFSP norm is a rule capable of affecting the outcome of the case, it can be invoked, provided that it is sufficiently clear, precise and unconditional. This conclusion in my view can be in principle extended to the Common Position as well, as it is a binding instrument (1); and consolidates a set of rules the evasion of which would not be reconcilable with the unconditional character of the obligations pending on MS (2). Both aspects are elaborated upon below.

IV. On whether Common Position 2008/944/CFSP is binding

Common Position 2008/944/CFSP is a binding instrument, and this can be derived from its drafting history, legal basis and content. From a historical viewpoint, Common Positions are a legacy of Maastricht, representing one of the two instruments of EU external action foreseen by Art. J.1 Maastricht TEU. In this original legal context, they were intended to constrain MS conduct. To this end, Art. J.2 Maastricht TEU provided an obligation on MS to conform their national policies to these instruments and to uphold them when participating in international fora, obligation extending even to their diplomatic missions (Art. J.6). At present, the Council no longer uses Common Positions as a fully-fledged instrument, adopting decisions formulating these instead (cf. Art. 25 TEU, listing ‘positions to be taken by the Union’)16. The Common Position’s corresponding legal basis in the Lisbon Treaty

12. Judgment of the Court of 24 October 1996, Kraaijeveld (C-72/95, EU:C:1996:404, para. 56).

13. B. De Witte, ‘Direct Effect, Primacy, and the Nature of the Legal Order’, in Craig & De Burca (eds) The Evolution of EU Law, Oxford University Press, 2021, p. 194.

14. S. Prechal, ‘Does Direct Effect Still Matter?’ 37 Common Market Law Review, 2000, p. 1048.

15. Judgment of the Court 19 September 2000, Linster (C-287/98, EU:C:2000:468, para. 32).

16. Article 25(b)II.

corroborates this, providing for the adoption of decisions formulating the Union’s position.17 But this change does not prejudice the binding nature of this instrument. As discussed above, Common Positions were binding preLisbon, and this has been confirmed by the Court of Justice too.18

The content of the act supports this view: first, the instrument imposes a duty on MS to examine licenses against the criteria set in art. 2 (Art. 1). Second, Art. 4 imposes a duty to notify of and take into account other MS’ license denials. Third, Art. 7 sets that Member States are to work in the CFSP framework to ‘maximize the effectiveness of the Common Position’. Fourth, they are under a duty to ensure that national legislation enables the control of exports of items mentioned on the EU common military list.

In short, Common Position 2008/944/CFSP is a binding legal instrument, a conclusion that the Council itself underlines.19 What remains to be ascertained for the purpose of direct is whether it can entail rules which are sufficiently clear, precise and unconditional.

V. On whether the Common Position contains ‘rules’

Option 1 – It may but it should not (a Segi situation)

One could argue that Common Positions may have direct effect, but they should not. This is a view that arguably flows from Segi and Gestoras pro Amnistia. These (pre-Lisbon) cases concerned the indirect review via a preliminary ruling of three Common Positions adopted on the basis of Arts. 15 and 34 Nice TEU (2nd and 3rd Pillar, respectively). They were, as such, particular acts, not subject to review by the Court pursuant to Art. 35 (Nice) TEU. While finding that Common Positions addressed MSs, and thus were not intended to ‘produce legal effects upon third parties in themselves, the Court stressed that it retained power to review those measures if they produced effects via a preliminary ruling and, potentially to review their legality’.20 One could thus say that as a CFSP act, the Common Position is intended to set rules for cooperation among MSs, but not to affect the legal situation of individuals. If for any reason it does so, it would entail a misuse of powers by the Council which the Court would have jurisdiction to review and correct, e.g., via a preliminary ruling. But even this view does not preclude direct effect, for the Court clearly said in Van Duyn that acts which may be subject to a preliminary reference, must evidently be capable of being invoked before national courts. And as Segi provides, CFSP acts producing effects upon third parties must be reviewed by the Court via, e.g., a preliminary ruling, to potentially correct this mistake. Now this would entail that the Common Position has a reparatory direct effect, subordinate

17. Article 29 TEU.

18. Judgment of the Court of 27 February 2007, Segi and Others v Council, (C-355/04 P, EU:C:2007:116, para. 52).

19. Council Conclusions on the review of Council Common Position 2008/944/CFSP of 8 December 2008 on the control of arms exports (ST 11718/19 INIT + COR 1), 16 September 2019, para 4.

20. Judgment of the Court of Justice, Segi , paras 54-55.

to the need to ensure observance of the law. Nonetheless, it ought to be invoked for this control to take place. In other words, even a conservative reading of the Treaties cannot preclude the reviewability of CFSP norms before national courts.

Option 2 – It does (a Mangold situation)

An alternative view to the above is that the provisions of Common Position 2008/944/CFSP can constitute rules capable of being invoked because they concretise the general principle of respect for international law. This is admittedly a view consisting of a number of considerations which deserve further commentary. In view of the space limit, I will limit myself to providing the following observations.

The notion of ‘general principle’ describes ‘those principles of law extrapolated from the common constitutional traditions of the Member States, which define the limits of public power and seek to protect the individual’.21 The ‘general international law principle of respect for contractual commitments’22 (pacta sunt servanda, Art. 26 VCLT) is a ‘fundamental principle of any legal order’ and, therefore, one such general principle.23 Further, the EU is bound, in the exercise of its powers, to observe international law in its entirety.24 Given this recurring jurisprudence concerning the effects of international law on the EU and MSs alike, it seems possible to me that respect for international commitments, in accordance with Arts. 21 and 3(5) TEU, could form part of the general principles of Union law.

It is worth noting that special position afforded to the CFSP by Art. 24 TEU does not limit the applicability of general principles of EU law25, as the provision speaks of rules and procedures alone and, as Wessel points out, provides that the CFSP is to be ‘[..] implemented within the framework of the principles and objectives of its external action’.26 The Common Position is a Union instrument, adopted on a CFSP legal basis and obliging MS to ‘work within the CFSP framework’ (Art. 7). Moreover, the Common Position makes express reference in its preamble to the Arms Trade Treaty27 (to which all MS are parties), as well as to the 2030 UNGA Agenda for Sustainable Development (Recital 5). The substantive provisions reiterate this context, invoking compliance with specific international instruments and standards (Art. 2). Finally, the Council itself has underlined that ‘a

21. T. Tridimas, ‘The General Principles of EU Law and the Europeanisation of National Laws’ 13(2) Review of European Administrative Law, 2020, p. 9.

22. Judgment of the Court of 6 October 2020, Commission v Hungary (C-66/18, EU:C:2020:792, para. 92).

23. Judgment of the Court of 25 May 2004, Distilleria Palma v Commission, (Case T-154/01, EU:T:2004:154, para 45); Judgment of the Court of 16 June 1998, Racke (C-162/96, EU:C:1998:293, para. 49).

24. Judgment of the Court of 27 February 2018, Western Sahara Campaign UK (C-266/16, EU:C:2018:118, para. 47).

25. C. Hillion, ‘A Powerless Court? The European Court of Justice and the EU Common Foreign and Security Policy’, p. 27.

26. R Wessel, ‘General Principles in EU Common Foreign and Security Policy’ In K. Ziegler, P. Neuvonen, & V. Moreno-Lax (eds.), Research Handbook on General Principles in EU Law: Constructing Legal Orders in Europe, Edward Elgar, 2022, p. 611.

27. Council Decision (CFSP) 2019/1560 of 16 September 2019 amending Common Position 2008/944/CFSP defining common rules governing control of exports of military technology and equipment, OJ 2019 L 239, Recitals 3-4.

responsible arms trade policy makes [an essential contribution] to the maintenance of international peace and security and respect for Human Rights and International Humanitarian law’.28

Against this background, it appears from the preamble and substantive content of the Common Position that this instrument has the clear intent to provide rules concretising the international commitments binding on the MS in regulating arms export. By analogy to Mangold, the effectiveness of this commitment would be prejudiced if it could not be invoked on account of its CFSP content, because it intends to provide the required rule/standard rule applicable to the assessment of licenses for items falling on the EU Common Military list. In an objective way, the Common Position could thus have direct effect.

VI. On the notion of sufficiently clear, precise and unconditional rule

Finally, a given provision must also meet specific textual criteria. This is an assessment which is difficult to determine a priori given that it depends on the particular provision under examination. Suffice to say, it is evident that the attribution of discretion to Member States (which the Commission Position does as well, e.g. Art. 4(2)) does not prejudice the ability to invoke a provision (Kraijeveld, Linster, AMS).

VII. Conclusion

The question of direct effect of CFSP norms remains moot, yet the analysis shows that some of the considerations thus far advanced against this possibility rely on a partial understanding of both direct effect and the juridical status of CFSP norms. Common Position 2008/944/CFSP may be posited to be akin to an ‘international law decision’, thus not intending to produce rights and duties on individuals. But its provisions also look like rules, consolidate rules and are applied like rules. And thus maybe they are rules, even if adopted on a CFSP basis. The fact that some Member States allegedly apply the Common Position directly to military export assessment cases in my view demonstrates just that.29 The two options formulated to discuss this idea serve as specific examples of possible ways of revisiting our understanding of the spectrum of enforceability of instruments in the CFSP. As such, they may hopefully help debate the extent to which resistance to judicial enforcement of CFSP norms should take place. Irrespective of which is favoured, it is argued that direct effect will still depend on whether the given provision is sufficiently clear, precise and unconditional – an admittedly difficult finding in relation to CFSP norms.

SUGGESTED CITATION: Alina Carrozzini; “The direct effect of CFSP norms in light of Common Position defining common rules governing the control of exports of military technology and equipment, https://eulawlive.com/weekend-edition/weekend-edition-no185/

28. Council Conclusions on the review of Council Common Position, para 2.

29. Specifically, France and Malta. See 25th Annual Report, pp. 55, 58.

HIGHLIGHT F THE WEEK S O

Directive (EU) 2024/1226 on the definition of criminal offences and penalties for the violation of Union restrictive measures, published in OJ

Monday 29 April

Directive (EU) 2024/1226, adopted by the European Parliament and the Council on April 24, 2024, establishes comprehensive rules for defining criminal offences and penalties related to the violation of Union restrictive measures, crucial for safeguarding the integrity of the internal market, promoting Common Foreign and Security Policy (CFSP) objectives, and ensuring peace and security within the Union.

Read on EU Law Live

Commission Delegated Regulation (EU) 2024/1239 amending Regulation (EU) 2018/196 on additional customs duties on imports of certain products originating in the United States of America, published in OJ

Monday 29 April

Official publication was made of Commission Delegated Regulation (EU) 2024/1239 of 22 February 2024 amending Regulation (EU) 2018/196, stemming from the European Commission’s assessment of the Continued Dumping and Subsidy Offset Act (CDSOA) and its compliance with World Trade Organization (WTO) agreements.

Read on EU Law Live

General Court to hear annulment action against ECB brought by Deutsche Bank and BHW Bausparkasse

Monday 29 April

Deutsche Bank AG and BHW Bausparkasse AG filed an action against the European Central Bank (ECB) in Case T-112/24, seeking partial annulment of the ECB’s decision dated December 8, 2023, along with Annexes I and II.

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Regulation on data collection and sharing relating to short-term accommodation rental services, published in OJ

Monday 29 April

Official publication was made of Regulation (EU) 2024/1028 of the European Parliament and of the Council of 11 April 2024 on data collection and sharing relating to short-term accommodation rental services and amending Regulation (EU) 2018/1724.

Read on EU Law Live

Council adopts fiscal rules reform for economic governance

Monday 29 April

The Council adopted three legislative measures to reform the economic and fiscal governance framework of the European Union, aimed at ensuring sound public finances and promoting sustainable growth.

Read on EU Law Live

Court of Justice to hear appeals against judgment of General Court annulling Commission’s approval decision of State aid granted in the context of COVID-19

Monday 29 April

The Official Journal of the EU published several appeals, lodged by the Commission and certain airlines, against a judgment of the General Court, in relation to Cases T-494/21 and T-216/21, concerning State aid granted to the the Air France-KLM Group, within the context of the COVID-19 pandemic.

Read on EU Law Live

Council adopts rules on the composition, labelling and naming of honey, fruit juices, fruit jams and dehydrated milk

Monday 29 April

The Council formally adopted revised regulations on the composition, labelling, and naming of various breakfast items, including honey, fruit juices, fruit jams, and dehydrated milk, aiming to provide consumers with more information to make informed choices, increase transparency regarding product origins, and combat food fraud.

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Request for a preliminary ruling regarding the interpretation of the Return Directive in relation to a case involving a third-country national detained for purposes of removal

Monday 29 April

A request for a preliminary ruling from the Korkein oikeus (Finland), lodged on 27 February 2024, regarding a situation governed by the Return Directive, was officially published in the OJ: Aroja (C-150/24).

Read on EU Law Live

Council gives approval for protocol ensuring cross-border data flows between EU and Japan

Monday 29 April

The Council adopted a decision, by which a protocol to include provisions on cross-border data flows in the agreement between the EU and Japan for an Economic Partnership was concluded.

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Digital Markets Act: Commission designates Apple as gatekeeper in relation to its operating system for tablets

Monday 29 April

The European Commission has designated Apple, with respect to iPadOS, its operating system for tablets, as a gatekeeper under the Digital Markets Act (“DMA”).

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Court of Justice’s judgment in La Quadrature du Net: General and indiscriminate retention of IP addresses does not necessarily constitute a serious interference with fundamental rights

Tuesday 30 April

The Court of Justice, sitting as a Full Court, delivered its judgment in a case concerning a preliminary ruling request, filed in the context of an action, brought by four associations for the protection of rights and freedoms on the internet before the Conseil d’État (Council of State, France), seeking annulment of a French decree, introducing two personal data processing operations aiming at protecting works covered by copyright or related rights: La Quadrature du Net e.a. (Données personnelles and lutte contre la contrefaçon) (C-470/21).

Read on EU Law Live

Council delays reporting obligations for specific sectors and Non-EU Companies

Tuesday 30 April

The Council officially approved a directive, aimed at extending the time frame for the implementation of sustainability reporting standards for specific sectors and non-EU companies.

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Access to telephone records may be granted only in relation to data of persons suspected of being involved in a serious offence, Court of Justice rules

Tuesday 30 April

The Grand Chamber of the Court of Justice handed down its judgment in a case regarding a preliminary reference on the compatibility of a provision of the Italian Privacy Code with Article 15(1) of Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications): Procura della Repubblica presso il Tribunale di Bolzano (C-178/22).

Read on EU Law Live

Court of Justice clarifies cross-border evidence transmission in EncroChat case

Tuesday 30 April

In the context of criminal proceedings involving illegal drug trafficking and the use of EncroChat, an encrypted telecommunications service, the Court of Justice provided clarity on the conditions for transmitting and using evidence across borders under the Directive regarding the European Investigation Order (EIO) in criminal matters: M.N. (EncroChat) (C670/22).

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AG Szpunar: FIFA Regulations on the Status and Transfer of Players restrict EU provisions on the free movement of persons and competition law

Tuesday 30 April

Advocate General Szpunar has handed down his Opinion in a case concerning a preliminary ruling request on the compatibility with the freedom of workers and the prohibition of cartels of certain provisions of the FIFA Regulations on the Status and Transfer of Players (‘RSTP’): FIFA (C-650/22).

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Council Directive 2009/119/EC imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products, clarified by Court of Justice

Tuesday 30 April

The Court of Justice delivered its judgment in „Trade Express-L“ (C-395/22) concerning the interpretation of several articles within the Council Directive 2009/119/EC imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products and Regulation (EC) No 1099/2008, as well as certain provisions of the Charter of Fundamental Rights of the European Union.

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Court of Justice to stream hearing of case concerning compatibility of German law allowing only persons qualified to practise law as partners in a law company with fundamental market freedoms and the Services Directive

Tuesday 30 April

The hearing of the Court of Justice’s Grand Chamber, in Halmer Rechtsanwaltsgesellschaft (C-295/23), concerning a preliminary ruling request, by which clarification has been sought by the Bayerischer Anwaltsgerichtshof (Germany) on the compatibility with EU law (Articles 49 and 63 TFEU, Services Directive) of the requirement in German law that only lawyers and persons practising equivalent professions may be partners in a law company and that partners must be professionally active in the law company, was streamed on the Court’s website.

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Court of Justice rules against Sweden in deposit guarantee scheme dispute

Tuesday 30 April

The Court of Justice delivered its judgment in Latvia v Sweden (Systèmes de garantie des dépôts) (C-822/21) concerning a breach of state obligations under Article 259 of the Treaty on the Functioning of the European Union (TFEU) and Directive 2014/49/EU on deposit guarantee schemes (DGS).

Read on EU Law Live

AG Campos Sánchez-Bordona delivers Opinion in concession contract modifications in the Adusbef (Pont Morandi) case

Tuesday 30 April

Advocate General Campos Sánchez-Bordona delivered his Opinion in Adusbef (Pont Morandi) (C-683/22) concerning a case brought before the Court of Justice regarding the modification of a concession contract for a motorway in Italy following a viaduct collapse.

Read on EU Law Live

Directive (EU) 2024/1203 on the protection of the environment through criminal law, published in OJ

Tuesday 30 April

Official publication was made of Directive (EU) 2024/1203 of the European Parliament and of the Council of 11 April 2024 on the protection of the environment through criminal law and replacing Directives 2008/99/EC and 2009/123/EC.

Read on EU Law Live

Commission takes action against airlines for alleged misleading green claims

Tuesday 30 April

In response to an alert from the European Consumer Organisation (BEUC), the European Commission and EU consumer authorities initiated action against 20 airlines for potentially deceptive environmental marketing practices.

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Official Journal publishes two Commission Notices of initiation of expiry review of anti-dumping measures adopted in relation to Chinese imports of organic coated steel products

Tuesday 30 April

Official publication was made of two Notices of initiation of an expiry review of the anti-dumping measures applicable to imports of certain organic coated steel products originating in the People’s Republic of China, following the submission of a request from the European Steel Association, under Regulation 2016/1036.

Read on EU Law Live

EU Directive introduces unified procedure for work permits and rights for third-country nationals

Tuesday 30 April

Official publication was made of Directive (EU) 2024/1233 of the European Parliament and of the Council of 24 April 2024 on a single application procedure for a single permit for third-country nationals to reside and work in the territory of a Member State and on a common set of rights for third-country workers legally residing in a Member State.

Read on EU Law Live

Regulation 2024/1258 amending Regulation 561/2006 concerning minimum requirements on minimum breaks and rest periods for passenger transport sector, published in OJ

Thursday 2 May

Official publication was made of Regulation (EU) 2024/1258 of the European Parliament and of the Council of 24 April 2024 amending Regulation (EC) 561/2006 regarding minimum requirements on minimum breaks and daily and weekly rest periods in the occasional passenger transport sector and as regards Member States’ power to impose penalties for infringements of Regulation 165/2014 committed in another Member State or in a third country.

Read on EU Law Live

Official Journal of the EU: New directive on asset recovery and confiscation in the framework of criminal proceedings

Thursday 2 May

The Official Journal of the EU published Directive (EU) 2024/1260 of the European Parliament and of the Council of 24 April 2024 on asset recovery and confiscation, aimed at establishing minimum rules on the tracing and identification, freezing, confiscation and management of property within the framework of proceedings in criminal matters.

Read on EU Law Live

Commission amending Implementing Regulation on definitive anti-dumping duty on Turkish and Indian imports of ceramic tiles, published in OJ

Thursday 2 May

Commission Implementing Regulation (EU) 2024/1221 of 30 April 2024 amending Implementing Regulation (EU) 2023/265 imposing a definitive anti-dumping duty on imports of ceramic tiles originating in India and Türkiye was officially published in the OJ.

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European Court of Human Rights finds no violation of protection of property in case concerning a confiscation order seeking to recover a cultural heritage object

Thursday 2 May

In the case of The J. Paul Getty Trust and Others v. Italy (application no. 35271/19), the European Court of Human Rights held, unanimously, that there had been no violation of Article 1 of Protocol No. 1 (protection of property) to the European Convention on Human Rights.

Read on EU Law Live