Business Operations in the European Union — Regulatory (Portfolio 7451)

Tax Management Portfolio, Business Operations in the European Union — Regulatory, No. 7451, provides a comprehensive guide to the legal issues, other than tax, affecting business in the European Union. Unlike the usual Tax Management Portfolios, this one does not focus on taxation issues, but rather examines the broad, wide spectrum of other areas of EU law which should be viewed as relevant and critical to all businesses already ensconced in or trading with the EU, or which are now seeking to enter the European market.

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Tax Management Portfolio, Business Operations in the European Union — Regulatory, No. 7451, provides a comprehensive guide to the legal issues, other than tax, affecting business in the European Union. Unlike the usual Tax Management Portfolios, this one does not focus on taxation issues, but rather examines the broad, wide spectrum of other areas of EU law which should be viewed as relevant and critical to all businesses already ensconced in or trading with the EU, or which are now seeking to enter the European market.

Chapter I provides an historical overview of the efforts to achieve European integration and examines in detail the EU's institutional structure and its decision-making processes. It will prove especially useful to those seeking to understand how the EU works. Chapter II examines the seminal single Internal Market Program, which defined the EU's efforts to move from a pure customs union to something greater, as it is now.

Chapters III and IV concentrate on the laws and procedures concerning competition (as antitrust law is generally called in Europe) and trade law and policy (focusing on anti-dumping and anti-subsidy measures). Chapters V–XI provide a legislative overview of company law developments, consumer protection and product liability issues, the opening of public procurement markets, environmental and social (labor law) policies, exchange controls and capital movement restrictions, and the common monetary policy which resulted in the creation of a single European currency — the Euro — for much (albeit not all) of Europe.

Chapters XII–XIV describe the “new” field of data protection (which has become increasingly important for business over the past decade), the protection of industrial and intellectual property rights, and technical standardization. And Chapters XV and XVI focus on two specific industry sectors — the provision of financial services and telecommunications — as they have tended to be of broad interest and relevance within the European context over the past 20 years or more. The last chapter discusses the authors' conclusions and future prognosis.

This Portfolio may be cited as Liebman, Antonini, Amory, and Amato, 7451 T.M., Business Operations in the European Union — Regulatory.


Howard M. Liebman, Esq.

Howard M. Liebman, A.B. (summa cum laude ), Colgate University (1974); A.M. (with distinction), Colgate University (1975); J.D. (cum laude), Harvard Law School (1977); Member, District of Columbia Bar and “B” List of the French-speaking Brussels Bar; Belgian Member, Tax Management International Forum.

Renato Antonini, Esq.

Renato Antonini, Erasmus Scholar, Utrecht University (1994); Laurea in Giurisprudenza (J.D.) (magna cum laude), University of Rome “La Sapienza” (1995); LL.M. in European Law, University of Edinburgh (1998); Member of the Rome and French-speaking Brussels Bar; Member, International Academy of Customs Law.

Bernard Amory, Esq.

Bernard Amory, License in Law, Catholic University of Louvain (1981); LL.M., University of Exeter, England (1983); Member of the Brussels Bar.

Filippo Amato

Filippo Amato, Law Degree (summa cum laude), University of Turin, Faculty of law (1995); International Trade Law Post-graduate Course, University Institute of European Studies — International Training Centre of the ILO, Turin (1996); LL.M., College of Europe, Bruges (1998); LL.M., Columbia University School of Law (2001).

Table of Contents

Detailed Analysis
I. Introduction
Introductory Material
A. The European Union
1. The Treaties
a. The ECSC, EEC and Euratom Treaties
b. The Single European Act, and the Treaties of Maastricht (TEU), Amsterdam and Nice
c. The Aborted EU Constitutional Treaty
d. The Treaty of Lisbon
2. The Enlargements
B. European Union Institutions
1. The European Parliament
2. The European Council
3. The Council
4. The Commission
5. The Court of Justice of the European Union
a. The Court of Justice
b. The General Court
c. The Civil Service Tribunal
6. The European Central Bank
7. The Court of Auditors
8. Other EU Bodies
a. European Economic and Social Committee
b. Committee of the Regions
c. Ombudsman
d. European Investment Bank
C. EU Law
1. Sources of EU Law
2. European Union Secondary Legislation
a. Regulations
b. Directives
c. Decisions
3. International Agreements
D. Legislative Procedures
1. Ordinary Legislative Procedure
2. Special Legislative Procedures
a. Consultation
b. Consent
c. Information
3. Budget
E. Procedures for Enforcing EU Law
1. Actions Against Member States
a. By the Commission
b. Stages of an Infringement Procedure Pursuant to Article 258
c. Defenses and Judgment
2. By Member States
3. Actions Against EU Institutions
a. Actions by Member States, the Parliament, the Council and the Commission to Annul Measures Adopted by the Institutions
b. Actions by Individuals
4. Actions to Require EU Institutions to Act
5. Actions to Obtain Reparation of Damages from the European Union
6. Actions to Obtain a Preliminary Ruling on Issues of EU Law
7. Specific Actions
a. Plea of Illegality
b. Interim Measures
8. Enforcement of EU Law by National Courts
9. Summary
F. The Decision-making Process: Function and Implementation of Directives
1. Harmonization of National Laws: An Overarching Principle
2. Scope of European Union Harmonization (Approximation) Measures
II. The Internal Market
Introductory Material
A. Free Movement of Goods
B. Commission's White Paper on Completing the Internal Market
1. Removal of Physical Barriers
2. Removal of Technical Barriers
3. Removal of Fiscal Barriers
4. Cecchini Report: A Cost-Benefit Analysis of the White Paper
C. Progress on Completion of the Internal Market
III. Competition Law and Procedure
A. Introduction and General Policy
B. Article 101 TFEU
1. The Structure and Conditions of Application of Article 101 TFEU
2. Examples of Activities Prohibited by Article 101(1) TFEU
a. Serious Restrictions of Competition (Restrictions of Competition “By Object”)
b. Agreements Which Do Not Appreciably Restrict Competition (“De Minimis”)
c. Agreements That May Fall Within the Scope of Article 101(1) TFEU Depending on Their Impact on the Market (Restrictions of Competition “By Effect”)
3. Block Exemption Regulations
a. The BER on Vertical Restraints
b. The BER on Vertical Agreements in the Motor Vehicle Sector
c. The BER on Specialization Agreements
d. The BER on Research and Development Agreements
e. The BER on Technology Transfer Agreements
f. Block Exemption Regulations Applicable to Other Industry Sectors
(1) Transport Sector
(2) Insurance Sector
(3) Agricultural Sector
g. Other Commission Notices and Guidelines
C. Article 102 TFEU
1. Dominant Position
2. Abuse
a. Exclusive Dealing, Including Fidelity Rebates
b. Refusals to Deal
c. Tying
d. Treating Similar Customers in Dissimilar Manner
e. Predatory Pricing
3. The Commission Guidance on Exclusionary Abuses
D. Public and Private Enforcement
1. The Decentralization of EU Competition Law Enforcement
2. Fines
3. Private Enforcement
E. Merger Control
1. Concentration
a. Sole Control
(1) Legal Sole Control
(2) De Facto Sole Control
b. Joint Control
(1) Legal Joint Control
(2) De Facto Joint Control
(3) Joint Ventures
c. Interrelated and Successive Transactions Constituting a Single Concentration
2. EU Dimension
3. Procedure
a. Mandatory Notification
b. Exclusive Jurisdiction of the Commission
(1) Referral at the Request of the Parties
(2) Referral at the Request of an EU Member State
(3) Additional Scope for EU Member States in EU Merger Review
c. Standstill Obligation
d. Timing of Notification
e. Form of Notification
f. Information to Be Supplied in the Form CO
g. Time Limits
(1) Pre-notification
(2) Initial Investigation — Phase One
(3) In-Depth Investigation — Phase Two
h. Remedies
4. Substantive Assessment of Mergers
a. Definition of the Relevant Product and Geographic Markets
b. Competitive Assessment of the Merger
(1) The Relevance of Market Shares and Market Concentration
(2) Coordinated Effects
(3) Countervailing Buying Power
(4) Market Entry
(5) Additional Test of Review of Compatibility for Certain JVs
c. Ancillary Restraints
F. Article 106(1) TFEU
1. Public Undertakings or Undertakings with Special or Exclusive Rights
2. Article 106(1) in Combination with Article 102 TFEU
a. Dominant Position in a Substantial Part of the Common Market
b. State Measures Encouraging, or Inevitably Leading to, Abuses of Dominant Position
(1) Inevitable Abuse
(2) Encouragement to Abuse
3. Article 106(1) in Combination with Other Articles of the TFEU
4. The Commission's Enforcement Powers
G. State Aid
1. Legal Basis and Notion of State Aid
2. Different Types of State Aid
a. Regional Aid
b. Other Horizontal Aid
c. Sectoral Aid
3. Notification of State Aid
4. Procedural Rules and Remedies
5. Suspension of Aid
6. State Aid, the Single Internal Market and Distortion of Competition
7. Developments in State Aid Policy
H. Derogations from EU Competition Law
1. Article 106(2) TFEU
2. Services of General Economic Interest
3. Proportionality Principle
a. The Restriction or Derogation Must be Suitable to Achieve General Economic Interest Goals
b. The Restriction or Derogation Must Not Go Beyond What is Necessary to Achieve General Economic Interest Goals
4. The Development of Trade
5. Article 346 TFEU
IV. Anti-Dumping and Anti-Subsidy Law and Procedure
A. Background
1. Anti-Dumping
2. Anti-Subsidy
B. How Dumping, Countervailable Subsidies, Injury and a Causal Link Are Determined
1. Dumping
2. Countervailable Subsidies
3. Injury
4. Causal Link
C. Anti-Dumping or an Anti-Subsidy Case Procedure
1. Filing the Complaint
2. Initiation of Proceedings and Response to Commission Questionnaires
3. Investigation
a. Commission's Powers
b. Rights of the Interested Parties
4. Imposition of Provisional Duties
5. Termination of Proceedings
a. Termination Without Measures
b. Undertakings
c. Definitive Duties
6. Anti-Circumvention
7. Judicial Review
a. Timing
b. Who May Request Judicial Review (Locus Standii)
(1) Complainants and Exporters
(2) Importers
8. Post-Termination Procedures
a. Interim Review
b. Expiry Review
c. New Exporter Reviews
d. Refund of Excessive Duties
D. Practical Suggestions
1. Avoidance Measures
2. Defense of a Case
V. Company Law
A. Policy
B. Existing Legislation
1. General EC Corporate Law
a. Safeguards (Directive 2009/101/EC)
b. Limited Liability Companies (Second Company Law Directive)
c. Single-Member Private Limited Liability Company (Directive 2009/102/EC)
d. European Economic Interest Groupings (Regulation 2137/85)
e. European Company (Societas Europae)
f. European Cooperative Society
2. Mergers and Split-Ups
a. Mergers (Third Company Law Directive)
b. Cross-Border Mergers (Tenth Company Law Directive)
c. Takeover Bids (Thirteenth Company Law Directive)
d. Split-Ups (Sixth Company Law Directive)
3. Corporate Governance
a. Responsibility of Board Members
b. Independent Directors and Board Committees
c. Directors’ Remuneration
d. Shareholders’ Rights
4. Annual Accounts
a. Simplification of the Business Environment for Companies Established in the EU
b. Annual Accounts
c. Annual Consolidated Accounts
d. Statutory Audit Procedures
e. Accounts of Branches (Eleventh Company Law Directive)
f. Financial Institutions and Insurance Companies
(1) Financial Institutions
(2) Insurance Companies
5. Transparency Obligations of Listed Companies
C. Proposed Legislation
1. Corporate Groups (Ninth Company Law Directive)
2. Social Economy Enterprises
3. The European Private Company (Societas Privata Europea)
4. Disclosure of Non-financial Information by Certain Large Companies
5. Cross-Border Divisions
6. Codification of Company Law
7. Revision of the Shareholder Rights Directive
8. Quality of Corporate Governance Reporting
9. Single Member Companies Directive
VI. Consumer Protection Law and Policy
A. Introduction
B. Definition, Goals and Importance of EU Consumer Protection Law
C. The Notion of the Consumer and the Scope of Application of EU Consumer Protection Law
D. The Legal Instruments Governing EU Consumer Protection Law
E. Brief Discussion of the Key Directives
1. Product Liability Directive
2. Product Safety Directive
3. Directive on Consumer Rights
VII. Public Procurement
A. Policy
B. Public Procurement Agreements with Third-Party Countries
1. The World Trade Organization's Agreement on Government Procurement (formerly GATT Agreement on Public Procurement)
2. The Government Procurement Agreement and the EU
C. The Pre-1985 EU Legislation
1. Public Works
2. Supplies
3. The Excluded Sectors
4. Enforcement Procedures
D. The Single Market Public Procurement Program
1. Public Works
2. Supplies
3. Comparison of the Works and Supplies Rules
4. Excluded Sectors
5. Public Services
E. The 2004 Public Procurement Directives
F. The New Public Procurement Directives
1. Simplification of the Rules and Better Access for Bidding Companies
2. Flexible and Transparent Procurement Rules for Contracting Authorities
3. E-Procurement
4. Public-Public Cooperation
5. Simplified Regime for Service Contracts and Services Excluded from the Scope of European Public Procurement Rules
6. Green, Social and Innovative Public Procurement
a. Green Public Procurement
b. Social (and Labor) Law in Public Procurement
c. Innovative Public Procurement
7. Public Procurement Reform in the Utilities Sectors
G. Sector-Specific Procurement Legislation
1. Defense and Security Equipment and Services
2. Public Passenger Transport Services
H. Judicial Remedies
VIII. Environment
A. Introduction
B. Legislative Basis
C. Primary Areas of European Environmental Legislation
1. Water Pollution
2. Air Pollution
a. Air Quality Standards
b. Product Quality Standards
c. Car Emissions
d. Air Pollution from Industrial Plants
e. Chlorofluorocarbons
3. Control of Chemical Substances
4. Waste
a. Waste Prevention
b. Recycling and Re-use
c. Waste Disposal
(1) Landfills
(2) Incineration
5. Integrated Environmental Management
6. Other Selected Issues
a. Climate Change
b. Noise
c. Genetically Modified Organisms
D. General Issues
1. Information and Coordination
a. The European Environment Agency
b. Access to Information
2. Environmental Impact Assessments
3. Environmental Liability
4. Environmental Crime
IX. Social Concerns
A. Legislative Background and Policy
B. Existing Legislation
1. Free Movement of Workers and Persons
2. Social Security for Workers and their Families
3. Equal Treatment for Men and Women
4. Improvement of Working Conditions
a. Collective Redundancies
b. Transfers of Undertakings
c. Insolvency of Employer
d. European Works Council
e. Working Conditions
5. Health and Safety of Workers
6. Working Time
7. National Action Plans for Employment and Employment Guidelines
X. Exchange Controls and Capital Movements
A. Introduction
B. Legal Framework and Origins
1. Current Rules
2. Historical Background
C. What Is a Restriction?
1. Definition of Capital Movement
2. Distinction Between Capital and Payment
3. Definition of a Restriction
4. Various Forms of Restrictions
5. Tentative Categorization of Restrictions Based on the Area Concerned
D. Situations When a Private Party Can Invoke Article 63 TFEU
1. Direct Effect
2. Wholly Internal Situations
3. Non-EU Countries
E. Member State Restrictions
1. Safeguards
2. Derogations
3. Derogations Enshrined in the TFEU
4. Derogations with Regard to Non-EU Countries.
5. Case Law-based Justifications
F. Conclusion
XI. Common Monetary Policy
Introductory Material
A. Economic and Monetary Union — The Historical Underpinnings
B. European Currency Unit
C. Economic and Monetary Union and the Euro
1. Timetable for Economic and Monetary Union
a. Stage One
b. Stage Two
c. Stage Three
2. Economic and Monetary Union Institutions
a. European System of Central Banks
b. European Monetary Institute
c. The Euro Group
3. “Opt-Out” Clause for the United Kingdom and Denmark
4. Euro Summit
5. Miscellaneous Observations
D. Effects of Economic and Monetary Union on Business
E. Developments Following the European Sovereign Debt Crisis
1. European Financial Stabilization Mechanism
2. European Stability Mechanism
3. Fiscal Union
4. Banking Union
XII. Industrial and Intellectual Property Rights
A. Policy
1. Introduction
2. Free Movement of Goods and the Exhaustion of Rights Doctrine
3. Free Movement of Services
B. Existing and Proposed Legislation
1. Measures Against Goods Infringing Intellectual Property Rights
2. Enforcement of Intellectual Property Rights
a. The Enforcement Directive
b. International Jurisdiction and Enforcement of Judgments within the EU
3. Patents
a. The European Patent Convention
b. The European Patent with Unitary Effect
c. The Unified Patent Court
d. Patentability of Computer-Implemented Inventions
e. Patent Term Extension
f. The Legal Protection of Biotechnological Products
g. Access to Patented Medicines for Countries in Need
4. Trademarks
a. Trade Marks Directive
b. Community Trade Mark Regulation
c. Trademark Treaty
5. Copyrights
a. Copyright in the Information Society
b. Computer Programs
c. Rental and Lending Rights
d. Term of Protection of Copyright and Neighboring Rights
e. Databases
f. Resale Rights
g. Management of Copyright and Related Rights
h. Protection of Topographies of Semiconductor Products
6. Audiovisual Policy
a. Audiovisual Media Services Directive
b. Satellite Broadcasting and Cable Retransmission
c. Protection of Encrypted Services
7. Designs
a. The Directive on the Legal Protection of Designs
b. The Community Designs Regulation
c. The Hague System for the International Registration of Industrial Designs
8. Utility Models
XIII. Norms and Technical Standards
A. Purpose of Standards
B. European Union Harmonization of Standards
1. Legislative Base — Article 115 TFEU
2. Standstill Agreements
3. The “New Approach”
a. Essential Requirements
b. Basic “Protection Objectives”
4. New Legislative Framework
C. Declaration of Conformity
D. European Standards-Setting Bodies
1. European Committee for Standardization/European Committee for Electrotechnical Standardization
a. Structure
b. Aims
2. European Telecommunications Standards Institute
a. Membership and Structure
b. European Telecommunications Standards Institute Deliverables
c. Relations with Other Standards-Setting Bodies
E. Product Certification and Testing
1. The Global Approach to Certification and Testing
a. Guiding Principles
b. Modules for Assessing Product Conformity
2. European Forum for Conformity Assessment
F. Commission Green Paper on European Standardization
G. International Cooperation
XIV. Data Protection
A. Introduction
B. The Data Protection Directive
1. Definitions and Scope
2. Conditions for Legitimate Processing/ Data Quality
3. Sensitive Data Processing
4. Rights of the Data Subject
a. The Right to Be Informed
b. The Right of Access
c. The Right to Rectify, Erase and Block Data
d. The Right to Object
5. Security
6. Data Protection Authorities
7. Notification Obligation
8. Transfer of Personal Data from the EU to Third Countries
C. Reform of the Data Protection Rules: The EU General Data Protection Regulation
D. Sectorial Directives and Regulations
1. Data Protection by EU Institutions — Regulation 45/2001
2. E-Privacy Directive 2002/58
3. The Data Retention Directive 2006/24 (Now Invalid)
XV. Financial Services
Introductory Material
A. Insurance
1. Non-Life Insurance
2. Life Insurance
3. Efforts to Modernize Existing Legislation
B. Banking
1. Early Measures
2. Second Banking Directive and Related Measures
3. Deposit Guarantee Schemes Directive
4. Payments
a. Electronic Payments and E-Money
b. Cross-Border Payments
5. Other Efforts to Modernize Existing Legislation
C. Transactions in Securities
XVI. Telecommunications
A. Historical Liberalization of the Telecommunication Sector
B. The 2002 Regulatory Package
1. The Framework Directive
a. Relevant Definitions
b. National Regulatory Authority (NRA)
c. Companies with Significant Market Power (SMPs) Market Analysis by NRAs
(1) Definition of the Relevant Market
(2) Identification of an SMP Operator
(3) Imposition of One or Several Obligations
(4) Cooperation Mechanism
2. The Access Directive
3. The Authorization Directive
4. The Universal Service Directive
5. The Liberalization Directive
6. Spectrum Regulation
a. Decision 676/2002 on a Regulatory Framework for Radio Spectrum Policy in the European Community (“Radio Spectrum Decision”)
b. The Radio Spectrum Committee and the Radio Spectrum Policy Group
c. Market Based and Flexible Approach
d. Harmonization Decisions
e. The Radio Spectrum Policy Programme
7. European Regulators Group, the Communications Committee and ENISA
a. European Regulators Group (ERG)
b. Communication Committee (COCOM)
c. European Network and Information Security Agency (ENISA)
C. The 2009 Regulatory Package
1. Better Regulation Directive
2. Citizens’ Rights Directive
3. BEREC Regulation
D. Recent and Forthcoming Legislation
E. The Roaming Regulations
F. Regulation of Terminal Equipment
G. Telecommunications Standardization
H. Electronic Commerce
1. Policy
2. The E-Commerce Directive
3. The Regulation of Electronic Identification
4. The Consumer Rights Directive
5. Other Measures
I. Public Procurement Procedures for Telecommunications Services
XVII. Practical Implications and Conclusions

Working Papers

Table of Worksheets
Worksheet 1 Tables of Equivalences
Worksheet 2 Ordinary Legislative Procedure
Worksheet 3 Consultation Procedure
Worksheet 4 Consent Procedure
Worksheet 5 Selected European Union Communications, Directives and Regulations