The organisational structure of the EU may, with all its complexity, seem Byzantine to outsiders. One will recognise an interesting mix between the traits of a traditional international organisation and those of a state-like entity with typical separation-of-powers issues.

According to Article 13 TEU (ex Article 7 TEC), the EU possesses the following institutions:

1. – the European Parliament

2. – the European Council

3. – the Council

4. – the European Commission

5. – the Court of Justice of the European Union

6. – the European Central Bank

7. – the Court of Auditors.

In addition, advisory institutions, such as the European Economic and Social Committee or the Committee of the Regions , shall assist the European Parliament, the Council and the Commission. While the ‘institutional triangle’, consisting of the Council, Commission and Parliament which are largely responsible for the Union’s legislation, will be described in some detail in this chapter, the courts of the EU, the European Court of Justice, the European General Court as well as the Civil Service Tribunal, will be explained in Chapter 5 (Judicial control within the Union). This section aims at explaining the composition and internal decision making of the Union’s institutions, while their interaction in the context of European legislation will be analysed in Chapter 3 (The making of Union law).

Gradually establishing the free movement of goods, one of the four freedoms of the internal market, was one of the centre-pieces of early market integration in the EEC. This was pursued by internal and external measures. Already Article 9(1) of the original 1957 EEC Treaty (now Article 28(1) TFEU, ex Article 23(1) TEC) provided for the gradual establishment of a customs union between the Member States and a common customs tariff vis-à-vis third countries.

Internally, a customs union requires the elimination of customs duties and ‘charges having equivalent effect’ (Article 30 TFEU, ex Article 25 TEC) as well as of discriminatory or protectionist internal taxes (Article 110 TFEU, ex Article 90 TEC), plus the elimination of quantitative restrictions on imports and exports and ‘measures having equivalent effect’ (Article 34 and 35 TFEU, ex Articles 28 and 29 TEC).

Externally, the Common Customs Tariff is fixed by EU legislation in the form of Council regulations, which have been regularly updated since 1968. The Common Customs Tariff forms part of the Community’s exclusive powers in the field of the Common Commercial Policy.

However, the establishment of a true internal market for goods freely circulating within the entire area of the EU was not only a ‘legislative’ task, pursued by rule-making through treaty norms as well as secondary legislation in the form of harmonisation directives and regulations. To a large extent, the common market is the ‘product’ of the ECJ. The Court has pushed forward market integration in a line of landmark cases, such as Dassonville and Cassis de Dijon , in which it broadly interpreted the Treaty notion of ‘measures having equivalent effect’, and deduced a duty of ‘mutual recognition’ of goods lawfully produced and marketed in any of the Member States of the EU. The combined effect of these and subsequent ECJ cases has been a considerable limitation of the power of Member States to maintain rules which could exclude the goods of other Member States from their national markets. However, the Court has not been insensitive to criticism from the national level and proved in cases such as Keck that it was willing to restore, at least to some extent, the autonomous rule-making power of Member States.

For centuries, the history of the small continent, or quasi-continent, of Europe has been a history of war and peace, where rival political entities, predominantly in the form of nation-states, have tried to dominate each other. The terrible twentieth-century experience of two World Wars, fought mainly on European territory, provided the necessary impetus to seek alternative ways of political survival, co-existence, or even cooperation. In its historic context, European integration must be understood as an attempt primarily motivated by the desire to secure peace and stability through establishing appropriate institutions. The institutions created in post-war Europe were based on ideas, partly dating back to the Middle Ages. However, it was the situation after 1945 which made it possible to think about actually setting up new structures which would make war in Europe, if not impossible, then at least much less likely. The creation of a European Coal and Steel Community (ECSC) in 1951, by which two strategically important industry sectors of rival nations like France and Germany were pooled, was such an important and highly pragmatic first step. It was soon followed by the establishment of two further organisations, the European Economic Community (EEC) and the European Atomic Energy Community (EURATOM) in 1957, which were designed as open regional organisations with a long-term goal of a yet undefined European unity.

Until today the process of European integration has been characterised by a constant tension between the maintenance of individual Member State power and further integration, leading to ‘an ever closer union among the peoples of Europe’, as promised in the opening lines of the 1957 Treaty of Rome’s preamble.

In addition to the effective implementation of the free movement of goods, characteristic of a customs union, the Community has always aimed at guaranteeing the free movement of persons in order to create a true internal market. This ‘internal market’ is defined in Article 26(2) TFEU (ex Article 14(2) TEC) as ‘an area without internal borders in which the free movement of goods, persons, services and capital is ensured’. The history of the EU is the history of the gradual implementation of these so-called four freedoms which follows a similar regulatory pattern, that is, ensuring non-discrimination and eliminating intra-EU restrictions by Member States.

This chapter will provide an overview on the EU rules on the free movement of natural and legal persons, that is, individuals and companies. They originate in three sets of Treaty provisions: the free movement of ‘workers’; the freedom of establishment; and the freedom to provide services. The resulting, rather narrow economic rights have been broadened through the case law of the ECJ and secondary EU legislation, which has almost led to a general right of free movement. The Luxembourg Court did so by broadly interpreting the entitlements contained in Treaty provisions and by gradually restricting the powers of Member States to limit these rights.

Union law consists of so-called primary and secondary law. The concept of primary law relates to law made by the Member States via their international law treaty-making powers. Therefore, it comprises the initial 1957 Treaty of Rome plus various treaty amendments, such as the SEA, the Maastricht, Amsterdam, Nice and Lisbon Treaties, the Charter of Fundamental Rights as well as the accession treaties. Secondary law, on the other hand, refers to law made by the Union’s institutions based on the authorisation contained in the Treaties (the primary law). Articles 288 to 292 TFEU outline the different categories of legal acts of the Union. Whereas Article 288 TFEU refers to the instruments to be used by the Union, Articles 289–292 TFEU establish a hierarchy of norms between legislative and non-legislative acts. Article 294 TFEU specifies the most important form of law-making, the ordinary legislative procedure, whereas various special legislative procedures are found throughout the Treaty.

What kind of instruments are used for Union law-making?

The instruments at the disposal of the Union for law-making are regulations, directives and decisions, as well as soft-law instruments such as recommendations and opinions. Article 288 TFEU briefly characterises the legal quality of these legal acts:

To a considerable degree EU law has been shaped by the European Court of Justice (ECJ). The Court has rightly been called a ‘motor of integration’ because, in the years of Euroscepticism and political standstill on the question of ‘deepening’ integration, it has largely created the ‘acquis communautaire’. Its case law, in particular in the field of the four freedoms, has made a significant contribution to the harmonisation and mutual recognition of national standards which, in turn, was essential for the creation of a true internal market.

The Court was able to attain this crucial role as a ‘quasi-law-maker’ because of its broad jurisdictional powers. In fact, the ECJ acts as ‘constitutional court’ of the EU exercising ‘judicial review’ over both the EU and its Member States. According to the ECJ’s own reasoning in Case 294/83 Les Verts v. Parliament [1986] ECR 1356, the Community is:

The ECJ, composed of judges from all Member States, exercises this judicial control mainly through ‘annulment actions’ directed against acts of the EU institutions, ‘infringement actions’ directed against Member States and ‘preliminary rulings’ providing guidance to national courts for the interpretation of EU law.

The initial European Economic Community was largely about the creation of a Common Market, comprising a customs union and providing for the unhampered free movement of goods, persons, services and capital. Over the years, Community/Union competences have been considerably extended into other fields, called policies in EU jargon. This chapter will briefly address those EU policies which have gained significantly in importance, such as the Common Agricultural Policy (CAP), environmental and social policy, with particular regard to non-discrimination issues. All were hardly visible in the original TEC and grew only as a consequence of judge-made law, EU legislation and Treaty amendments.

What are the objectives of the CAP?

According to Article 39(1) TFEU (ex Article 33(1) TEC) the aims of the CAP are:

1. (a) to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour;

2. (b) to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture;

3. (c) to stabilise markets;

4. (d) to ensure the availability of supplies; and

5. (e) to ensure that supplies reach consumers at reasonable prices.

Union law, that is, the treaties and secondary law made according to the different legislative procedures, is directly applied and enforced by EU institutions only exceptionally. The most important exception relates to the Commission’s power to enforce EU competition law (Articles 101 and 102 TFEU (ex Articles 81 and 82 TEC), as well as Regulation 17, now Regulation 1/2003). In addition, the Commission also exercises other treaty-based or delegated powers.

Most Union law, however, is applied and enforced in a decentralised fashion by national authorities. As a rule, the courts and administrative agencies of the Member States apply and enforce ‘directly applicable’ EU law as well as nationally implemented non-directly applicable Union law.

This chapter will explain how the European Court of Justice has made Union law ever more effective by declaring not only regulations, but also Treaty provisions and provisions in directives – under certain circumstances – directly applicable/effective in the legal systems of the Member States and by stating that, in case of conflict with national law, EU law enjoys primacy/supremacy.

What do we understand by ‘direct effect’?

A norm of international or supranational law is said to have ‘direct effect’ if it is sufficiently clear , precise and unconditional to be invoked before national courts or administrative agencies.

In EU law ‘direct effect’ may attach to provisions of the Treaty, of international agreements of the Union and secondary legislation, including, under certain circumstances, even to directives.

As opposed to general international law, where states are considered to be free as to how they implement international obligations and where direct effect, thus, normally depends upon national constitutional law governing the ‘incorporation’ of international law into the national legal order, the ECJ developed case law according to which the direct effect of Union law is an inherent characteristic of , and required by, EU law.

In a technical sense, EU competition policy covers what is known in many countries as cartel law or, in the United States, ‘anti-trust law’. The latter term was adopted because in the late nineteenth century, when anti-trust law was ‘invented’, most American cartels were established in the form of trusts. EU competition law rests on the triad of a cartel ban contained in Article 101 TFEU (ex Article 81 TEC), a prohibition on market abuse in Article 102 TFEU (ex Article 82 TEC) and merger control legislation. All three branches of EU competition law are handled by DG IV, now DG Competition, as the Directorate-General for Competition supporting the responsible Commissioner for Competition is known.

In a broader sense, other Union law also contributes to the overall aim of creating conditions for fair competition within the EU’s internal market. These include:

1. treaty provisions on free movement as a framework prohibiting mainly public restrictions on the free circulation of goods and services, such as duties and quantitative restrictions and their equivalent counterparts;

2. special competition rules for public undertakings in Article 106 TFEU (ex Article 86 TEC); and

3. the identification and justification or elimination of subsidies provided for in the state aid provisions of Articles 107–109 TFEU (ex Articles 87–89 TEC).

One of the main achievements of the Lisbon Treaty, already envisaged in the 2004 Draft Constitution Treaty in its endeavour to simplify European law and, thus, to make it more accessible to EU citizens, is the abolition of the three pillar structure under a common EU roof. Instead, one single EU replaced the existing supranational Community (Article 1 TEU). This new European Union pursues both the supranational former Community policies as well as the inter-governmental areas of cooperation, such as the CFSP. With the entry into force of the Lisbon Treaty, one EU, endowed with legal personality in Article 47 TEU, is expressly empowered to enter into international agreements with third countries and international organisations (Article 37 TEU and Article 216 TFEU) and is the sole actor on the international plane. However, even though all external relations of the EU are now governed by common principles, the CFSP retained some of its distinct features and remains separated in the TEU, rather than the TFEU.

When dealing with the EU as an international actor, the analysis of its competence is always twofold. The first important question is, whether a competence for the Union to act externally exists at all. In a second step, it is crucial whether an existing competence is exclusive to the EU or shared with the Member States.

Preface

This book owes its existence to a number of factors, most importantly the persistent requests of my students both at the Bologna Center of Johns Hopkins University and at Bocconi University in Milan for a simple and readable, and preferably short, introduction to the law of the European Union. It was, and remains, a particular challenge to teach EU law in institutions with mostly economics and political science students, who are not always wholly enthusiastic about learning the law. That made me realise that there is a lack of available academic resources for this particular purpose. Of course, there are the excellent treatises such as EU Law by Craig and De Burca, now already in its fifth edition (2011), and the second edition of European Union Law by Chalmers, Hadjiemmanuil, Monti and Tomkins (2010), as well as a number of other first-rate law books – needless to say, not always a light fare even for law students. The students at my home law school at the University of Vienna equally demanded access to learning the law in a most time-efficient manner.

Being brief on EU law is, of course, like squaring the circle, with the additional, hermeneutic complication that it is almost impossible to understand anything fully without first understanding everything, at least a little. This book has been written against all these odds. It aims at explaining the most important institutional aspects of the European Union, the interplay of its main bodies in the process of European legislation, the control of legality exercised by the two EU courts, the importance of fundamental rights in this context and the role of the EU as an international actor. It equally tries to familiarise the reader with the most important aspects of so-called substantive EU law, that is, the law of the four freedoms, in particular, the free movement of goods in the internal market and the freedom rights of EU citizens as workers, self-employed and family members. In addition, a number of other EU policies, such as the Common Agricultural Policy (CAP), environmental and consumer protection, Social Policy and Police and Judicial Cooperation in Criminal Matters (PJCC) are outlined, while a more detailed inquiry is made into European competition law.

The initial Community Treaties establishing the ECSC, the EEC and EURATOM did not contain any fundamental rights provisions at all. The 1953 Draft Treaty embodying the Statute of a European Political Community envisaged human rights protection as a major task and proposed to incorporate the European Convention on Human Rights (ECHR), a treaty concluded by many European states in 1950 under the auspices of the Council of Europe and enforced by the European Court of Human Rights (ECtHR) in Strasbourg. After the plans for a European Defence Community were buried by the French National Assembly in 1954, this idea also became obsolete. With the resurgence of the ‘functionalist approach’, culminating in the 1957 Rome Treaties, the view prevailed that the economic integration now pursued did not warrant the inclusion of human rights guarantees.

With the growth of the activities of the European Union, however, the likelihood of infringement of fundamental rights also increased. Clearly, the extension of Union law into many fields beyond the core aspects of the four freedoms was not a wholly unintended ‘spill-over effect’ of economic integration. This tendency was reinforced by the specific development of EU law, in particular of direct effect and primacy in such landmark cases as Van Gend en Loos and Costa v. ENEL. Both direct effect and primacy increase the probability that it is EU law itself and not any national implementation that may infringe human rights.