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The Public–Private Distinction, Autonomy and Free Movement: Unpacking the Assumptions

Mislav Mataija
Published Online: 2014-05-22 | DOI: https://doi.org/10.1515/gj-2014-0006

Abstract

This paper discusses the assumptions behind an evergreen issue of EU law – the so-called horizontal effect of the EU Treaty free movement rules. It is usually claimed that the use of those rules to impose duties on individuals should be limited in order to protect private autonomy. Debate on this issue is largely confined to how far those limits should go. This paper takes a step back and questions the central assumptions made both by legal practice and by scholarship: first, the public–private distinction as a basis for applying the EU Treaties; second, the broad argument for “private autonomy”.

Keywords: horizontal effect; public–private distinction; EU law; free movement; private autonomy

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About the article

Published Online: 2014-05-22

Published in Print: 2013-08-01


See inter alia Arts 34, 45, 49, 56 and 63 of the Treaty on the Functioning of the European Union (TFEU).

Even Art 34 TFEU on free movement of goods and Art 63 TFEU on free movement of capital refer only to restrictions “between” Member States, which on a strictly textual reading could also be created by private actors. Art 49 prohibits “restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State”, Art 56 covers all “restrictions on freedom to provide services within the Union” with a cross-border element, and Art 45 TFEU merely says “Freedom of movement for workers shall be secured within the Union”.

Case 26-62, NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration (1963), section B.

Later on, for the same purpose, the Court developed the Francovich doctrine of Member State liability for damages caused to individuals by violations of EU law (Joined cases C-6/90 and C-9/90, Andrea Francovich and Danila Bonifaci and others v Italian Republic (1991) ECR I-5357), as well as the notion that competition law violations must be followed by adequate and dissuasive sanctions (Case C-453/99, Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd and Others (2001) ECR I-629722).

Case C-281/98 Roman Angonese v Cassa di Risparmio di Bolzano SpA (2000) ECR I-4139, p. 35. See also case C-319/06, Commission v. Luxemburg (2008) ECR I-4323, p. 30 and 43. AG Lenz has characterised “the right to freedom of movement as a fundamental right which the Treaty confers individually on each worker in the Community” (AG Opinion in Case C-415/93, Union royale belge des sociétés de football association ASBL v Jean-Marc Bosman, Royal club liégeois SA v Jean-Marc Bosman and others and Union des associations européennes de football (UEFA) v Jean-Marc Bosman (1995) ECR I-4921, p. 203).

In the field of taxation, see e.g. Case C-282/07, Belgian State – SPF Finances v Truck Center SA (2008) ECR I-10767, p. 22–23.

If individuals could not rely on EU law against other individuals, the Member States could exempt areas of regulation from EU law scrutiny by delegating to private groups. In such a situation the only recourse against private violations of EU law would be to raise a claim against the Member State for tolerating them. That claim, however, might not be possible under domestic procedural law, or there might be evidentiary hurdles (e.g. showing a causal link between Member State inaction and the actual infringement of EU law committed by an individual). Bringing the case to the EU level would be doubly difficult – the Commission would have to be persuaded to raise a dispute between individuals to the level of an infringement action against a Member State. An example where that type of action was raised in this context is the Spanish Strawberries judgment, Case C-265/95, Commission of the European Communities v French Republic (1997) ECR I-6959.

A more complex issue is whether the domestic producer could seek damages from the State on the basis of reliance interests, including on the basis of the Francovich doctrine.

Case 58/80, Dansk Supermarked A/S v A/S Imerco (1981) ECR 181.

See Angonese (n 8), as well as Case C-94/07, Andrea Raccanelli v Max-Planck-Gesellschaft zur Förderung der Wissenschaften eV (2008) ECR I-5939.

This debate is particularly relevant to the question whether the free movement rules should apply to conduct that is also covered by the competition rules. See e.g. Odudu (2006, 30–33) and Odudu (2009, 263 et seq).

Burton v Wilmington Parking Authority, 365 US 715 (1961).

Shelley v. Kraemer, 334 U.S. 1 (1948). See Buchanan (1997a), as well as the second part of that work (Buchanan 1997b), for an extensive summary of the US case law on the state action doctrine.

BVerfGE 7, 198. See Kumm (2006), Bomhoff (2008) and Engle (2009).

As Kumm summarises, “under the guise of interpreting the general clause [of the civil code] the judge is required to make exactly the kind of determination that he would have been required to make were he to directly adjudicate competing constitutional rights” (p. 356).

Case 36-74, B.N.O. Walrave and L.J.N. Koch v Association Union cycliste internationale, Koninklijke Nederlandsche Wielren Unie and Federación Española Ciclismo (1974) ECR 1405, pp. 17–18; Bosman, pp. 82–83.

This suggestion is usually associated with the Opinion of AG Maduro in C-438/05, International Transport Workers’ Federation and Finnish Seamen’s Union v Viking Line ABP and OÜ Viking Line Eesti (2007) ECR I-10779.

Nowak (2009, 32), in a historical overview that extends as far back as the nineteenth century, describes how “the United States developed a preference for balancing public direction with private initiative and regulating the private excesses and market failures of competition and monopoly with what J.K. Galbraith termed ‘countervailing’ public power.”

See, however, the recent judgment in Case C-171/11, Fra.bo SpA v Deutsche Vereinigung des Gas- und Wasserfaches eV (DVGW) – Technisch-Wissenschaftlicher Verein (12.7.2012., nyr) where the Court explains the extension of the rules on free movement of goods to a private standard-setting body both by the ex post acceptance of their standards through national legislation and by the practical difficulty of using alternative means to access the market in question.

According to Tushnet, the idea of applying constitutional guarantees to private conduct thus combines two strands of liberalism: one which focuses attention to the threats governments pose for to human rights and another which focuses on the substantive scope of the human rights themselves.

As Manning concludes: “In any society, important economic and political decisions must be made and someone has to make them. The tough problem is how to allocate decision- making power on particular kinds of issues to the persons or institutions most likely to exercise it to produce the policy results we want… The question is not Power; it is policy” (p. 46).

C-341/05, Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet, Svenska Byggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet (2007) ECR I-11767, C-438/05, International Transport Workers’ Federation and Finnish Seamen’s Union v Viking Line ABP and OÜ Viking Line Eesti (2007) ECR I-10779. See Azoulai (2008, 1344–1346); Davies (2008, 135–136).

See n 14.

Several developments seem to point in that direction. Even though the Court never explicitly endorsed the AG’s reasoning in Viking Line (supra n 28), it has nevertheless found horizontal effect in the judgment. The more recent judgment in Fra.bo (supra n 31) is based at least in large part on the standard-setting body’s de facto, context-dependent power over market access (paras 30–31).

The Services Directive (Directive 2006/123/EC of the European Parliament and of the Council on services in the internal market (2006) OJ L376/36) explicitly states that it applies to “the rules of professional bodies, or the collective rules of professional associations or other professional organisations, adopted in the exercise of their legal autonomy” (see Arts 3/7 and 3/9). A different example is the Common Regulatory Framework for Electronic Communications, i.e. the Directive 2002/21 and the directives and regulations which have amended it over the years. Even though national regulatory agencies directly bear the brunt of the responsibilities, there can be no doubt that the anticompetitive behaviour of undertakings, especially telecom incumbents, is the main rationale for the Framework and that, as a consequence of the Framework, those undertakings are subject to detailed and intrusive regulatory controls.

See n 36.

See n 8.

Weintraub adds that there are differences within this perspective:

Locke and Adam Smith on the one hand, Hobbes and Bentham on the other, might be taken as the most distinguished representatives of the two poles within this universe of discourse: the side that leans toward a “natural” harmonization of selfish interests, whose grand theoretical achievement is the theory of the market; and the more technocratic, social-engineering side, which posits the need for a coercive agency standing above society (epitomized by Hobbes’s Leviathan). Ibid., at 8–9.

See in particular Arts 101 and 102 TFEU.

Case 43-75, Gabrielle Defrenne v Société anonyme belge de navigation aérienne Sabena (1976) ECR 455.

See supra n 3.

Case C-411/98, Angelo Ferlini v Centre hospitalier de Luxembourg (2000) Page I-08081.

See inter alia Case C-144/04, Werner Mangold v Rüdiger Helm (2005) ECR I-9981, Case C-555/07, Seda Kücükdeveci v Swedex GmbH & Co. KG (2010) ECR I-365 and Joined cases C-297/10 and C-298/10, Sabine Hennigs (C-297/10) v Eisenbahn-Bundesamt and Land Berlin (C-298/10) v Alexander Mai (8.9.2011., nyr).

In relation to the EU free movement rules, this argument is ubiquitous: Prechal and De Vries, for example, make it almost in passing, claiming that extending the horizontal effect of the free movement rules to all situations would be “a disproportionate interference with and permanent risk for the exercise of contractual freedom of private parties” (op. cit., 18).

Leible, supra n 17, at 68.

Of course, it is important to distinguish private action from private law, such as the law of contracts, which can undoubtedly be of a legislative or public character. Still, private law is often seen as the guarantor of contractual freedom and thus interfering with it through constitutional disciplines is seen as encroaching on the private sphere (Cf. the notion of a “private law society” – the classic here being Böhm 1966; see also Grundmann 2008 and Kumm 2006, 366). For a different perspective, see Michelon (2012) and Hesselink (2006).

As Spaventa points out, recognising the horizontal effect of the Treaty, general principles of law or fundamental rights is not costless – it is not just about “more rights” for one side, but also costs for the other. She then assumes that this burden should be placed on the State. “A party that acts following an unambiguous national rule might face disastrous economic consequences by virtue of the, sometimes random, application of Union law” (op. cit., 217).

“Thus, in cases presenting a true state action issue, the question is not whether the individual whose conduct is being challenged has a constitutional right to engage in that conduct; the power of the state to forbid that conduct is ordinarily conceded. Rather, given the state’s failure to do so, the question is whether, nonetheless, the authority delegated to the national government by the fourteenth amendment extends to prohibiting the individual’s conduct.”


Citation Information: Global Jurist, ISSN (Online) 1934-2640, ISSN (Print) 2194-5675, DOI: https://doi.org/10.1515/gj-2014-0006.

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