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ments based on fundamental rights although that approach
prevailed only in the very early years.
This evolution may suggest a further thought: that
with the internal market in goods now largely achieved, a more
10 11
Ibid. at para. 82. Ibid. at para. 93.
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relaxed view can be taken than was appropriate when the bar-
riers were still in place.
Finally, although the measure in issue here was a
national, rather than a Community, measure, and might
therefore attract more strict standards of review justifiably,
since national measures are more likely to obstruct the single
market the present case, in contrast to some of the cases we
considered earlier, was clearly not one in which there was any
protectionist intent or effect.
A second example, perhaps even more striking, is the
Omega Spielhallen case.12
Here the German authorities had banned a game
played in a laserdrome operated by the applicant company,
which involved the simulated killing of humans using laser
guns. The company, Omega, challenged the ban as contrary to
the freedom to provide services, since the equipment and tech-
nology were supplied by a British company.
The case again raised the issue of a conflict between
fundamental economic freedoms under the EC Treaty and
fundamental human rights, since the German courts upheld
the ban on the ground that the commercial exploitation of a
game involving simulated homicide was an affront to human
dignity protected by the German Basic Law.
On a reference from the German court, the ECJ
accepted that the restrictions on the freedom to provide ser-
vices satisfied the principle of proportionality: they did not go
beyond what was necessary to protect the values in question.
12
Omega Spielhallen und Automatenaufstellungs GmbH v.
Oberburgermeisterin der Bundesstadt Bonn [2004] ECR I-9609.
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the sovereignty of law
Moreover the Court expressly accepted and here the ruling
perhaps goes further than the previous case-law that the
outcome did not depend upon all Member States having a
shared conception of the way in which fundamental rights are
to be protected. The Court here recognizes the possibility or
even perhaps the merit of value diversity.
Other values
The European model, as it might be called, is a middle
of the road system which balances the free market against
other values. It is a balanced compromise, accommodating
both a market economy and a developed welfare State. This is,
broadly speaking, a balance long accepted in mainland Europe
by the main political parties, sometimes categorized as social
democrats and Christian democrats, although with differences
of emphasis. Formerly this European model could be con-
trasted with more extreme models: the socialist model of the
former Soviet Union and its satellites; it can still be contrasted
with the hire and fire model of the United States.
The balance is reflected in the system of the EC Treaty.
For example, the Treaty allows for different systems of property
ownership . This is understood as allowing for nationalized
industries and State ownership of the means of production. The
language now seems old-fashioned, and today privatization has
largely prevailed, for pragmatic reasons as well as ideological
reasons: State ownership and State control in many (not all)
sectors have failed. Indeed this may be one of the underlying
causes of the fall of the Berlin Wall. Today the premise of the
internal market, as we shall see, is a free economy.
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courts and free markets
Indeed the State in Europe is now increasingly choos-
ing to distance itself from the control of economic levers: it
chooses to guarantee the independence of central banks, and
with that to renounce a core instrument of policy, the power
to set central interest rates. Indeed it seeks to protect from
political control or interference key instruments of eco-
nomic policy.
Generally, the more successful economies in Europe
have moved away from State control to a more liberal system.
This has become part of the political consensus, no longer con-
tested on party political or ideological grounds; and not least
in the United Kingdom.
That new liberal economic order was anticipated by
the EEC Treaty. It generally sought to substitute market forces,
and the forces of competition, for the role of the State as the
regulator of the economy. Article 4(1) of the Treaty, as
amended, now refers to economic policies conducted in
accordance with the principle of an open market economy
with free competition .
Competition
Let me turn briefly to the subject of competition.
While the EC Treaty is neutral in some respects, it is
strong on enforcing competition.
Rules applying to undertakings
The EC Treaty contains a clear and succinct chapter on
competition. First come the Rules applying to undertakings
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the sovereignty of law
(Articles 81 to 86). They have survived essentially unchanged
for fifty years.
The main change was introduced recently, and
without the need to amend the Treaty. In 2004 the European
Commission effectively renounced its role as the principal
enforcement agency of the EC competition policy virtually
the only area of EC action where the Commission has that role.
A Council regulation,13 adopted on the proposal of the
Commission, transferred much of that responsibility to the
national agencies and national courts.
This was a bold application of the principle of sub-
sidiarity. It provides little support for the perception of the
Commission as a body constantly seeking to extend its powers.
It remains to be seen whether the national authorities will be
up to the task of enforcing the competition policy as effectively
as the Commission has done.
Difficulties may arise in particular where there are
competing values: again, competition policy may conflict, in
particular areas, with environmental concerns. With the assis-
tance of the Commission, where required, the national author-
ities should be able to maintain the effectiveness of the EC
competition rules.
The effectiveness of EC competition policy can be
contrasted with earlier UK approaches. The UK system
was formalistic, toothless and out of keeping with the newer
economic thinking, in the United Kingdom as well as in
Europe.
13
Regulation 1/2003/EC of 16 December 2002 on the implementation of
the rules on competition laid down in Articles 81 and 82 of the Treaty,
OJ 2003 L 1, p. 1.
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courts and free markets
In the European Union, competition and market
forces have largely, although by no means completely, replaced
the State in determining the direction of the economy.
Competition itself has to be protected: against the State,
against public undertakings and against undertakings which
have a dominant position in the market in question.
The EC Treaty provides a set of clear, cogent and rela-
tively straightforward principles of law which have been
remarkably effective and successful in their operation. Their
effectiveness is illustrated by the fact that many Member States,
including the United Kingdom, have voluntarily copied the EC
Treaty rules on competition for the purposes of their internal
law a remarkable example of spontaneous harmonization of
the law in Europe.
And this process of harmonization is not confined to
Europe. Apparently, at the last count, 110 countries have a body
of competition law. Many of those national systems are
directly based on the EC rules. That reflects well on the per-
ceived merit of the EC system although it might partly be due
to the fact that many of those countries seem wisely to have
called in the same expert to advise them on competition policy,
Professor Richard Whish of King s College London.
State subsidy and public services
Other difficult borderline issues in the field of compe-
tition arise in relation to subsidies granted by the State. It is
essential in a common market that States should be precluded
from propping up their own favoured lame industries: one
State s subsidy, it has rightly been said, is another State s
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