European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

The drafters of the EC Treaty defined three harmonization tools: regulations, directives and international conventions. More flexible than regulations, directives firstly made it possible to remove obstacles to the freedom of movement by coordinating the laws of the Member States. This first type of directive, which may be described as free movement directives, opened access to the so-called “closed” professions, particularly through recognition of diplomas or control. Integration directives came after the free movement directives and, going beyond the removal of restrictions, they harmonize the conditions of exercise of the activities in the various Member States.

The approximation of laws regarding establishment and the functioning of the domestic market is provided for in Articles 114 and 115 TFEU. In accordance with the ordinary legislative procedure, Article 114 gives jurisdiction to the Parliament and the Council to adopt measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States, without referring to a specific form of European provision. Article 115 refers more particularly to directives adopted unanimously by the Council in accordance with the special legislative procedure. 

The harmonization of laws was not very successful until the end of the 1980's by reason of the obligation to adopt provisions on a unanimous basis. Since the beginning of the 1990's and the introduction of the qualified majority by the Single European Act of 1986, supplemented by the Treaty of Maastricht in 1992, which provides a more flexible and more efficient adoption procedure, the approximation of laws has truly boomed: from 1991 to 1995, the number of directives relating to the internal market increased from 1,475 to 2,002. Now, measures having as their object the establishment and functioning of the internal market are adopted upon proposal of the Commission, by the Council, who rules upon the qualified majority, and the European Parliament according to the codecision procedure .

The intensity of harmonization through directive has varied over time and depending on the sector concerned. The first directives were very detailed, leaving little discretion to the Member States. In effect, they were not authorized to maintain or adopt provisions that were stricter than those of the directive, or to claim, in harmonized areas, legal or judicial exceptions to the violations of the freedom of movement. The distinction between directive and regulation has progressively become more and more theoretical: whereas, unlike regulations, a directive was to be binding on its addressees - the Member States - only regarding the result to be achieved, while keeping their competence regarding the form and means of implementing it, in some cases, it has become so precise that it no longer leaves any freedom of choice to the Member States. This type of harmonization, described as complete or exhaustive, used in particular regarding standardization, has given rise to strong resistance. The Commission, in its Notice on Technical Harmonization and Standardization, has therefore suggested a “new approach” , in order to re-launch harmonization in Europe on new bases, by limiting itself to legislating on the essential requirements applicable to products and by delegating the adoption of non-binding rules to European or international standardization bodies . This new approach, combined with mutual recognition and the principle of subsidiarity of the European action established by the Treaty of Maastricht, has inspired many minimum harmonization directives, in particular in the field of consumer law , which have enabled Member States to guarantee a higher level of protection to their citizens. In order to facilitate the adoption of directives, another trend has consisted in opening options to Member States, corresponding to the state of their respective laws, which has led in certain cases to depriving harmonization of any impact. Now, after further to-ing and fro-ing, European authorities have eventually, in the field of consumer law, settled on maximum harmonization directives, which deprive Member States of the possibility to keep more protective national provisions . According to the Commission, the diversity of domestic laws and the levels of protection constitute an additional financial burden for undertakings, which discourages exports and is an obstacle to the operation of the internal market, while creating a lack of confidence of consumers in cross-border transactions.

Unlike directives eliminating restrictions which fix minimum rules intended to favor establishment and free provision of services of citizens of the Member States on the whole territory of the internal market and leave to the original Member State control over the conditions of exercise of that activity, integration directives follow a more restrictive path for Member States, since the imposition of single rules may justify violations of the rights of certain traders where they constitute too great an obstacle to the completion of the internal market. Regarding industrial property, resorting to the theory of exhaustion of rights  has therefore led to limiting the exercise of national trademark laws.

Pursuant to Article 114(2) TFEU, the codecision procedure does not apply to fiscal provisions, to those relating to the free movement of persons nor to those relating to the rights and interests of employed persons.

COM(1985)19 final, not available in the OJ but included in a Council resolution of 7 May 1985, published at OJ C 136 of 4 June 1985.

Among the many "new approach" Directives, which we will not discuss by reason of their technical scope per sector, let's quote inter alia: Directive No 88/378/EEC of 3 May 1988 on the safety of toys (amended last by Directive No 2008/112/EC of 16 December 2008); Directive No 93/42/EEC of 14 June 1993 concerning medical devices (amended by Directive No 2007/47/EC of 5 September 2007); Directive No 1999/5/EC of 9 March 1999 on telecommunications terminal equipments.

See, inter alia, Directive No 84/450/EEC of 10 September 1984 relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising [now repealed].

See, inter alia, Directive No 98/5/EC of 16 February 1998 to facilitate practice of the profession of lawyer on a permanent basis in a Member State other than that in which the qualification was obtained; Directive No 2005/29/EC of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market; Directive No 2008/48/EC of 23 April 2008 on credit agreements for consumers.

First established by the case law of the Court of Justice, see, inter alia, Case C-337/95 Parfums Christian Dior v Evora [1997] ECR I-6013, LawLex200500005099JBJ; then by Article 7 of Directive No 2008/95/EC of 22 October 2008, to approximate the laws of the Member States relating to trade marks, OJEU L 299 of 8 November 2008, 25, which supersedes Directive No 89/104/EEC of 21 December 1988, OJEC L 40 of 1 February 1989, 1.

189. Integration directives