EU Law Enforcement

The Evolution of Sanctioning Powers

Stefano Montaldo, Francesco Costamagna, Alberto Miglio, Stefano Montaldo, Francesco Costamagna, Alberto Miglio

• Publisher: Routledge
• Year: 2021
• ISBN:
  9780429582776
• Edition: 1
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

The existence of a structured enforcement system is an inherent feature of national legal orders and one of the core elements of State sovereignty. The very limited power to issue sanctions has often been deemed a gap in the EC legal order. Over the years, the situation has progressively changed. The Union's institutional setting is growing in complexity and a variety of agencies has been or is expected to be endowed with law enforcement responsibilities. In addition, the so-called competence creep has led the EU to play an increasingly prominent role in several areas of EU law enforcement, including the issuing of sanctions.

This book examines these developments, focusing on both the general features of the EU legal order and the analysis of key-substantive areas, such as banking and monetary union, environmental law, and data protection. The work thus presents a general framework for understanding EU sanctioning based on structural features and general legal principles. Part I develops an analytical framework, tracking the most significant evolutive patterns of EU sanctioning powers. Part II adopts a more practical approach focusing on specific issues and policy areas. The book bridges a gap in existing literature and sheds new light on the relationship between the exercise of jus puniendi and the evolution of EU integration.

Chapter 1
INTRODUCTION

 

 

In 1992, Advocate General Giuseppe Tesauro noted that the issue of sanctions in the EU (then Community) legal order raised some concern, as sanctioning powers were considered to be lacking.¹ These words highlighted the shortcomings deriving from the limited sanctioning powers conferred upon the then European Community. At the time, three main factors contributed to scaling down the EC’s role in this domain. Firstly, the lack of legal bases in the Treaty and the Member States’ unwillingness to strengthen the sanctioning powers of the EC institutions, with limited exceptions. Secondly, according to some commentators, the European institutions were themselves focused on developing the Community legal order and policies, rather than on securing the implementation of relevant legislation at domestic level. Thirdly, the exercise of jus puniendi was still perceived as a primary task of the national authorities, due to its close connection with the idea of sovereignty over a given territory and a group of people. Consequently, the EC sanctioning system was originally confined to those limited provisions of secondary legislation expressly conferring such a task to the Community institutions.

In less than thirty years, the scenario has steadily changed.

Following the Amsterdam Bulb and Greek Maize case law,² EU law may require the Member States to impose proportionate, appropriate and effective sanctions as a corollary to their general obligation to ensure the effectiveness of EU law. This duty stems from the principle of loyal cooperation and has been considered a contrario as evidence of the existence of a structured EU-driven repressive system. Indeed, it provides a legal basis for the imposition of a sanction even in the absence of specific provisions of EC law.³ However, Greek Maize situations merely reflect the multi-layered structure of the European legal order and the general rule according to which the Member States are tasked with implementing and executing EU law. Although national authorities have the duty to punish certain conduct under Article 4(3) TEU, the Union’s jus puniendi is blurred by the allocation of the choice regarding the type and extent of a sanctioning measure at domestic level. Certainly, recent practice indicates that the margin of discretion left to the Member States is gradually being eroded, as the European legislature increasingly sets out the nature of the sanctions to be enacted at domestic level and the basic criteria of their intensity.

 

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¹ G. Tesauro, La sanction des infractions au droit communautaire, General Report, XV FIDE Congress, Lisbon, 1992, 425.

² Case 50/76, Amsterdam Bulb, ECLI:EU:C:1977:13; case C-68/88, Commission v. Greece (Greek Maize), ECLI:EU:C:1989:339.

³ This can be inferred from Advocate General Capotorti’s opinion as expressed in Amsterdam Bulb, para. 4.

 

Yet, this is just one of the developments affecting the EU’s ability to exercise sanctioning powers. Indeed, EU institutions and bodies are increasingly endowed with direct sanctioning powers. The reach of the integration process has instigated a transformation process of the Union’s law enforcement powers and responsibilities, prompting the centralisation of enforcement powers into the hands of EU institutions and bodies.

On one hand, ever since the first cases in which the Court of Justice acknowledged that the then Community was entitled to impose sanctions, European institutions have fully exploited broadly worded primary legal bases — such as provisions enabling them to take all necessary measures to ensure the functioning of a given mechanism or system — to strengthen their direct enforcement powers. The common agricultural policy is a case in point. Neither the original version of Article 40 EEC (subsequently re-numbered as Article 34) nor the current wording of Article 40 TFEU expressly codifies such a power. Nonetheless, the Union legislature has relied on this legal basis to enact a vast array of measures to enrich its sanctioning toolbox. The compatibility of these instruments with the Treaties has been confirmed in abstracto by the Court of Justice.⁴ As a consequence, the recourse to sanctioning powers (and to the broad definition of the very notion of sanction) has expanded to other domains, such as the environment policy. Interestingly, the Court of Justice has resorted to a similar approach in relation to its own powers pursuant to Article 279 TFEU, which entitles the Court to prescribe “any necessary interim measures.⁵

On the other hand, over the last two decades, Treaty reforms and new legislation have led either to the formal attribution to EU institutions and bodies of the power to impose sanctions directly or to the strengthening of previously granted competences, for instance with regard to restrictive measures and country sanctions, in infringement proceedings, in the framework of the EMU and of the Banking Union.

Moreover, in the absence of a formal definition, the very notion of sanction has been construed broadly. The EU toolbox has been gradually equipped with an array of both punitive and restorative measures. The former are intended to place burdens on those who affect European interests or more generally infringe EU law, be they Member States, third countries, natural or legal persons. These include traditional monetary sanctions — e.g. competition fines, sanctions for breaches of data protection rules, fines issued in the framework of the banking supervision rules, and lump sums and penalties pursuant to Article 260 TFEU — but also much more diversified measures, such as the suspension from the enjoyment of certain rights, the prohibition on receiving EU funding for a given period or on performing a given activity, seizure and confiscation. The latter are basically intended to restore the situation prior to a violation of EU law occurring and are mainly represented by restitutions of unduly obtained sums and revocations of decisions, awards and statuses. Even though both categories of measures contribute to shaping the EU system of repression, punitive sanctions pose particular challenges and call into question the scope and breadth of the Union’s powers. Therefore, they represent the principal focus of this book.

 

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⁴ See for instance 354/95, National Farmers’ Union, ECLI:EU:C:1997:379.

⁵ Case C-441/17 R, Commission v. Poland, paras 103 and 104, ECLI:EU:C:2017:877.

 

Although the development of EU law enforcement schemes and methods has recently triggered insightful studies, the advances of the EU’s direct sanctioning power are still largely under-examined among legal scholars. Against this background, the book aims to provide a comprehensive picture of this phenomenon and its evolution, including its systemic implications for the European legal order and the relationship between EU and national law. For this purpose, the book is structured as follows.

Firstly, the trend towards the expansion and strengthening of EU sanctioning powers is reflected in the growing complexity of the EU’s institutional setting and a variety of agencies has been or is expected to be endowed with law enforcement responsibilities. When considered from a more general perspective, the emergence of an articulated repressive machinery at supranational level is a sign of the degree of complexity and maturity reached by the EU legal order. In the opening chapter, Miroslava Scholten assesses this intricacy and categorises the models of EU law enforcement, highlighting the role played by sanctions in this regard. Her analysis is complemented by the chapter written by Jacopo Alberti, which focuses on the growing diversification of entities endowed with sanctioning powers at EU level by concentrating on the role of EU agencies. The chapter argues that the vague legal status of these bodies and their diversified structures and tasks have contributed to the fragmentation of EU law enforcement models into as many bits and pieces as the relevant stakeholders that are involved.

In addition to mapping models and stakeholders, the book identifies the main triggers and rationales of the evolution of EU sanctioning power. As is generally recognised, jus puniendi pursues the well-established goals of fostering the effectiveness of Union policies and overseeing the proper implementation of EU law at domestic level. This is further confirmed by the fact that the strengthening of the EU’s sanctioning capabilities is often a reaction to a perceived lack of effectiveness of the relevant legal framework. The economic and financial crisis and the rule of law backsliding taking place in certain Member States provide apt examples in this regard.

In this context, the book investigates the rationale behind the EU sanctioning power also with regard to traditional enforcement mechanisms. The chapter by Luca Prete does just this, focusing on the infringement procedure and discussing its most recent developments. The problem of effectiveness also lies at the core of the debate on the recourse to sanctions in order to protect the values of the Union. Matteo Bonelli, in his chapter, focuses on the EU sanctioning toolbox and its suitability for protecting the rule of law, illustrating the interplay between preventive mechanisms and hard sanctions, and between political and judicial enforcement tools.

The teleological approach to sanctioning powers unveils an inherent tension between the quest for the effectiveness of EU law and policies with the general principles of the EU legal order. The further the EU sanctioning authority expands, the greater the need becomes to establish appropriate limits on the use of punitive powers by EU institutions and bodies. From this perspective, Nicole Lazzerini addresses the relevance of the Charter of Fundamental Rights, while Stefano Montaldo looks at EU sanctions through the lens of the principle of proportionality, which underpins the whole sanctioning cycle, from the abstract pre-determination of the form and amount of a sanction to its actual imposition in an individual case.

Beyond this general institutional layer, the evolution of EU sanctioning powers follows diversified paths depending on the specific policy domain involved. Here, the blurring of enforcement models reaches its peak, in parallel with the scope and breadth of the EU’s competence to impose sanctions. The book depicts this complex and diversified scenario by providing insights into key areas where the Union is entitled to issue repressive measures to safeguard compliance with its interests and policies.

Alberto Miglio and Francesco Costamagna look at the enforcement machinery in the EMU economic pillar and observe that, despite the prominence of sanctioning mechanisms and the emphasis on fiscal discipline, recourse to formal sanctions has been negligible due to the presence of alternative enforcement tools. This chapter is complemented by Frédéric Allemand’s analysis of the new sanctioning toolbox given to the European Central Bank in the framework of prudential supervision on the banking system.

Two chapters focus on EU restrictive measures in the context of the CFSP. Charlotte Beaucillon discusses the normative power of the Union to use these sanctions as tools of value exportation. She outlines the possible future developments of the EU’s practice and critically addresses the political conditionality of partnership agreements, illustrated by human rights clauses, which have led some third countries to prioritise the establishment of commercial relationships with other areas of the world. Andrea Spagnolo provides a complementary perspective on CFSP sanctions by looking at the topic through the lens of international law, discussing the legality of EU autonomous CFSP sanctions in light of recent complaints raised before the International Court of Justice and the WTO against similar sanctions imposed by the United States.

The concluding set of chapters covers EU policies where the Union’s repressive powers are either particularly deeply rooted and developed or stand out due to their peculiar features. Luca Calzolari looks at competition law fines pursuant to Articles 101 and 102 TFEU and the respective secondary legislation, examining the legal nature of sanctions, their rationale, and the calculation methods. Francesco Munari outlines the main features of EU environmental law enforcement, affecting not only Member States with infringement procedures and interim measures, but also individuals under the Environmental Liability Directive and the Environmental Crime Directive. Lastly, Paul de Hert’s chapter provides a detailed analysis of law enforcement tools in the context of EU data protection law, mapping the sweeping changes brought about by the GDPR.

 

Stefano Montaldo – Francesco Costamagna – Alberto Miglio
(University of Turin)

Chapter 2
EU (SHARED) LAW ENFORCEMENT: WHO DOES WHAT AND HOW?

Miroslava Scholten*-**

ABSTRACT: Enforcement of EU law has changed considerably in the last decades. By bringing the recent developments together, this chapter offers a ‘bird’s-eye view’ of the what, who and how’ concerning enforcement of EU law. It discusses the many ways of enforcement under the three scenarios and zooms in on the most intrusive enforcement power, i.e., the sanctioning power. All in all, it shows that enforcement of EU law has been done differently in different policy areas, which demonstrates an ongoing search for the conditions and factors of when EU law enforcement can be enforced more effectively and what role there is for sanctions to ...