Community Competence to Regulate the Internal Market

Abstract

The claim of the Court of Justice in the Tobacco Advertising case that the Community institutions lack a general competence to regulate the internal market does not withstand critical examination. The Tobacco Advertising case contained both competence restricting and competence enhancing elements. The principal competence restricting elements were (a) that obstacles to trade could be addressed by removal of the obstacles, but not by a ban on the subject matter of the trade; (b) that harmonisation could only be justified by distortions of competition if those distortions were appreciable; (c) that in principle all provisions of a contested internal market measure must contribute to the internal market aims of the measure in question. The principal competence enhancing element was the proposition that a measure which makes some contribution to the internal market may be adopted as an internal market measure even if its main aim is public health protection; despite the fact that harmonisation of public health requirements is in principle ruled out by the Treaty. A further competence enhancing element was that the Court adopted an impressionistic approach to assessment of the requirement that distortions of competition must be appreciable if they were to justify harmonisation, leaving open the possibility that this requirement might be relaxed or sidestepped by the lawmaking institutions. The competence restricting elements of the Tobacco Advertising case have been contradicted or eroded by subsequent case law, such as the British American Tobacco case, and the Swedish Match case. After the latter case, obstacles to trade can be addressed by simply banning the trade. After the British American Tobacco case, it seems that hypothetical obstacles to trade, resulting from disparities between national labelling rules, can be addressed by eliminating the disparities in question, even if this makes no contribution to cross border trade in the products in question. In the Leitner case, the Court confirms that its approach to the requirement adopted in Tobacco Advertising, that distortions of competition must be appreciable in order to justify harmonisation, will be an impressionistic one. And in Rundfunk the Court considers that as long as a measure makes a contribution to the internal market, it is legitimate for that measure to regulate situations which have no link at all with freedom of movement - something of a retreat from the Tobacco Advertising case, but in line with case law dating from the 1960s which gives wide reading to competence to coordinate national social security rules in order to provide freedom of movement for workers. More broadly, it is noted that Community competence has not in practice been confined to removing obstacles to trade and distortions of competition, but extended to harmonising national rules which facilitate freedom of movement and to removing differences between national rules which create uncertainty for those contemplating cross border transactions. This aspect of Community competence to regulate the internal market is potentially far reaching, and could lead to the use of such measures as instruments of general governance. This does not seem consistent with a scheme of attributed competences, nor with a system in which decisions are to be taken "as closely as possible to the citizen," in accordance with the principle of subsidiarity.