Kaltoft – a step (in the wrong direction?) towards protection from weight discrimination under EU law

Dr Iyiola Solanke

Over the last two to three decades the prevalence of overweight and obese[1] people has become a major public health issue across countries, age-groups, class, race and ethnicity. As long ago as 2003, research estimated that 61% of Americans were overweight, and 20% were obese. In 2006, the OECD ranked Britain’s overweight and obesity rate (62%) as the worst in Europe and the third-worst in the world, behind Mexico (69.5%) and the U.S (67.3%). In 2008, more than 1.4 billion adults were overweight, including over 200 million obese men and nearly 300 obese million women. More than 40 million children under the age of five were overweight in 2011. Children and adults are getting fatter.

The rise in body size is a public health issue because of its cost: medical experts link numerous ailments to excess weight, such as diabetes, angina, osteoarthritis, stroke, gout, gall bladder disease, breast cancer, cancer of the colon and ovarian cancer. Overweight and obese people are said to be more prone to heart disease, stroke, high blood pressure, diabetes, chronic depression and many other life threatening conditions. An overweight child is likely to become an overweight adult. The cost to the public purse could be billions of pounds.

The CJEU has now confirmed that obesity is also a matter for equality law. EU law does not formally prohibit fattism – like other public health issues, this remains within the competence of the member states[2] – but in the first case of its kind, the CJEU decided that discrimination on the grounds of obesity can fall within the disability strand of the Equal Treatment Directive 2000/78. This was stated in answer to questions arising before a Danish court during a case concerning the weight of a childminder.


Mr Kaltoft was hired by the Municipality of Billund in 1998 on a permanent contract as a childminder. He was obese at the time of his initial employment and, despite periods of weight loss, remained such throughout his 15 years in this post. From March 2010, he appeared to be under informal review, being visited by his boss and asked about his weight. During 2010, when the number of children in Billund fell, he was given fewer children to look after. That same year, he was chosen to be dismissed. When Kaltoft asked why he was the only childminder to be dismissed, he was told it was due to his decreased workload. Kaltoft was convinced that it had something to do with his weight.

His trade union brought an action before the District Court seeking compensation for him, arguing that he had been subjected to weight discrimination. The Danish court stayed proceedings to ask the CJ four questions, of which only the first and fourth were answered: whether it is contrary to EU law (for example Article 6 TEU on fundamental rights) for a public-sector employer to discriminate on grounds of obesity in the labour market; and whether obesity could be deemed to be a disability covered by Directive 2000/78/EC.

The first question was dealt with relatively swiftly: the Fourth Chamber of the Court of Justice did not emulate the boldness of the Grand Chamber in Mangold but citing Chacon Navas and Coleman declared that ‘EU law must be interpreted as not laying down a general principle of non-discrimination on grounds of obesity as such…’[40]. The Fourth Chamber then considered whether obesity is a disability. Its reasoning began from the purpose of Directive 2000/78: to set out a ‘general framework for combating discrimination, as regards employment and occupation, on any of the grounds referred to in that article, which include disability.’ It then noted the meaning of direct discrimination in this Directive and its scope of application – per Article 3(1)(c) it covers all persons in the public and private sectors, and all phases of employment including dismissals. Citing HK Danmark and Glatzel, where the CJ – taking inspiration from the EU ratification of the United Nations Convention on the Rights of Persons with Disabilities – stated that

53…the concept of ‘disability’ must be understood as referring to a limitation which results in particular from long-term physical, mental or psychological impairments which in interaction with various barriers may hinder the full and effective participation of the person concerned in professional life on an equal basis with other workers

It concluded that in order to be compatible with Directive 2000/78, the concept of ‘disability’ a)‘must be understood as referring not only to the impossibility of exercising a professional activity, but also to a hindrance to the exercise of such an activity’ [54] and moreover that b) the concept had to be open-ended in relation to the ‘origin of the disability’ [55] – it could not be dependent upon ‘the extent to which the person may or may not have contributed to the onset of his disability.’ [56] Thus while obesity itself is not a ‘disability’ within the meaning of Directive 2000/78 [58], it decided that obesity could be covered by the concept of ‘disability’ in that Directive where

  1. ‘the obesity of the worker concerned entails a limitation which results in particular from physical, mental or psychological impairments that in interaction with various barriers may hinder the full and effective participation of that person in professional life on an equal basis with other workers, and the limitation is a long-term one, obesity can be covered by the concept of ‘disability’ within the meaning of Directive 2000/78.
  2. Such would be the case, in particular, if the obesity of the worker hindered his full and effective participation in professional life on an equal basis with other workers on account of reduced mobility or the onset, in that person, of medical conditions preventing him from carrying out his work or causing discomfort when carrying out his professional activity.

It was left for the Danish court to decide whether, despite the fact that he was able to work effectively for 15 years as a childminder, his obesity during his term of employment nonetheless limited Kaltoft in the way envisaged by the EU concept of ‘disability’. He would then have to prove that his dismissal was because of his obesity. Continue reading

Case C-364/13 – Patentability of embryonic stem cells and parthenotes: Inherently Uncertain?

plomerAurora Plomer

On 18th December 2014, the Grand Chamber of the CJEU revisited the scope of the moral exclusion on industrial and commercial uses of “human embryos” in Article 6(2) (c) in Directive 98/44/EC on the legal protection of biotechnological inventions (Biotech Directive) and held that the exclusion does not cover unfertilized human eggs produced by parthenogenesis (parthenotes).

The referral followed the refusal of the UKIPO to grant two national patents to International Stem Cell Corporation (‘ISCO’) [2013] EWHC 807 (Ch) on the ground that the patents fell within the definition of the term ‘human embryo’ adopted by the Grand Chamber in Brüstle (EU:C:2011:669) .     The first patent, GB0621068.6, entitled “Parthenogenetic activation of oocytes for the production of human embryonic stem cells” covered both the methods for producing pluripotent human stem cell lines from parthenogenetically-activated oocytes and the stem cell lines themselves.   The second application GB0621069.4 , entitled “Synthetic cornea from retinal stem cells” similarly included claims to methods and ‘product-by-process’. The UKIPO applied the Grand Chamber’s reasoning in Brustle that parthenotes were ‘capable of commencing the process of development of a human being just as an embryo created by fertilisation of an ovum can do so’ and therefore fell within the meaning of paragraph 36 of the judgment in Brüstle (C‑34/10, EU:C:2011:669). ISCO appealed on the grounds that, according to current scientific knowledge, mammalian parthenotes can never develop to term because, in contrast to a fertilised ovum they do not contain any paternal DNA, which is required for the development of extra-embryonic tissue (para 17). In this light, the High Court of Justice (England & Wales), Chancery Division (Patents Court), decided that the appeal “raised a question of considerable importance. What is meant by the term “human embryos” in Article 6(2)(c) of the Biotech Directive? In particular, what was meant by the CJEU in Brüstle by the expression “capable of commencing the process of development of a human being”? Does that contemplate the commencement of a process which must be capable of leading to a human being? Or does it contemplate the commencement of a process of development, even though the process cannot be completed, so that it is incapable of leading to a human being?” (At para. 3).

Continue reading

A Tale of Two Referendums

Aidan O’Neill QC

Reflecting on the French Revolution in the opening lines of A Tale of Two Cities, Charles Dickens wrote:

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way…”

This passage may serve equally well as a description of the competing claims that were made by the opposing sides in this year’s Scottish independence referendum.

The pro-independence campaign claimed that voting for an independent Scotland would open the way to the best of times, to the age of wisdom, to the epoch of (self)-belief, to the season of Light, to the spring of hope, in which Scots would have had everything before them and which would lead directly to an earthly (Caledonian) paradise.

The pro-union campaign, in response, struck a primarily negative note, seeming unable to find the words to sing the virtues of a British union continuing into the future.   Instead, they said that an independent Scotland would open the doors to the worst of times, that voting in favour of separation would be an act of foolishness and of self-delusion which the voters in Scotland would live to regret in a winter of despair, with nothing before them but a road paved with good intentions and broken dreams.

I fear that similarly competing and irreconcilable claims will be made by the opposing sides in the campaign around the anticipated referendum on the United Kingdom’s continuing membership of the European Union, following the coming general election.   Those wishing the UK to break from the EU will doubtless extol the mythic virtues and heroic vigour of Albion unbound. Those advocating the UK’s continued membership of the EU – like those who campaigned for Scotland’s to stay in the (British) Union – will find it difficult to articulate a positive vision of Europe which will resonate with (particularly English) voters and will, instead, fall back on emphasising the economic dangers and market uncertainties which will come with our “turning our back on Europe” and falling prey to those vices etymologically associated with island life: isolationism and insularity. Continue reading

Review: EU Law and Integration: Twenty Years of Judicial Application of EU Law, José Luís Da Cruz Vilaça

Joelle Grogan, University of Oxford

EU Law and Integration is a collection of articles written by the author over the course of his eminent career as an academic, an Advocate General, the first President of the Court of First Instance (now the General Court), and now as a Judge at the Court of Justice of the European Union. Some of the contributed articles have been translated from their original language of publication, while others have been written with collaborators. Divided into sections broadly concerning EU constitutional law; the judicial structure of the EU; judicial protection of individuals; competition and state aid; and more general studies in law and economic integration in the EU, this volume has a very broad scope.

As a judge, and an academic, the author provides practical insight as well as keen analysis into the areas of the law upon which he focuses. Articles concerning the judicial architecture of the Union provide some of the most interesting reading in the volume. Writing the Foreword to the book, the Vice-President of the Court of Justice of the EU, Koen Lenaerts, aptly refers to this section as the ‘cornerstone’ of the volume. The author’s analysis of the problems facing the Court of First Instance in its first year has particular historical value and relevance, as he was the founding President of the Court. It is interesting to read – with hindsight – of the first struggles of the Court in terms of administration and the preparation of rules of procedure. The author’s rationalisation of the relatively long length of CFI judgments is illustrative of how the Court of First Instance viewed its duties with regard to the appellate jurisdiction of the Court of Justice. The concluding perspectives on the future of judicial architecture of the EU are also interesting as the author advocated incremental, rather than radical, changes in the judicial system, and the reader is sometimes left to wonder what conclusions he would make in light of the Lisbon Treaty reforms (and whether they were not reforms in name only), and the push towards judicial networking.

Seminal cases concerning economic integration feature prominently in the work, and readers are well advised to read the author’s consideration of the impact of the Pfizer case on the Precautionary Principle in EU law. The author illustrates the early caution show by the Courts which clearly advocated a prudential approach as regards determining the risks for human and animal health, and the environment. While the author acknowledges that this judicial approach probably did not pave the way to the ultimate systemic application of the principle, it did clearly foreshadow it. Readers, however, might be curious as to how the author would consider the Precautionary Principle’s current status under Article 191 TFEU, which does not feature in the republished 2004 article.

This absence of reference to the Lisbon Treaty reforms leads to an issue the reader may experience with this collection. Republished material can seem out-dated, especially in the fast-evolving European Union. Analysis and insight, while apt, would have benefitted in some articles from an updated account, or at least reference to the current situation. The cases analysed in this book, while seminal (for example Keck and Mithouard, Azores, and Alpine Investments) have had a new life in the courts which is not addressed by the book, leaving the reader at some points feeling as if they are missing part of the story. One further example of this is that ‘current case law’ of state aid relates to cases from, at the most recent, 2006. The absence of important reforms to the law over the last five years, most notably in light of Lisbon, also do not feature at all in the book, which can appear odd to the contemporary lawyer. Continue reading

EU Free Movement as a Legal Construction – not as Social Imagination

Daniel Thym

Monetary union demonstrates that some EU projects are realised without preparation for all eventualities. In the case of the euro, the financial crisis revealed lacunae in the field of economic and budgetary supervision, which the euro countries had to bridge through the introduction of new instruments. In the case of Union citizenship the legal gaps are less dramatic, but nonetheless visible – in particular with regard to access to social benefits for persons who do not work. It was these uncertainties that the European Court of Justice (ECJ) had to confront in the Dano judgment of last Tuesday. It opts for a surprisingly conventional solution, which abandons earlier attempts to conceive of Union citizenship as a projection sphere for political visions of a good life and just society.

The European Court of Justice as Legal Technician

A reminder of the debate about the Free Movement Directive demonstrates the absence of clear political guidance. Initially, the EU Commission had suggested to lay down explicitly that Union citizens who do not work should not have access to social benefits during the first five years of their stay in another EU country (Art. 21.2). It later abandoned the project after the ECJ had ruled in Grzelczyk that similar provisions on study grants do not pre-empt recourse to the Treaty guarantee of non-discrimination. As a result, the final version of the Free Movement Directive reiterated existing Treaty rules, whose precise bearing for people like Ms Dano remained unclear. Otherwise put, there was never a positive political agreement at EU level on the status of Union citizens who do not work. This shifted the responsibility upon judges to resolve open questions.

Judges in Luxembourg used this room for manoeuvre for progressive decisions on various occasions. Judgments such as Grzelczyk, Martínez Sala, Collins, Trojani, Bidar, Vatsouras and Ruiz Zambrano constitute the most ambitious and tantalising line of case law in recent memory. They are characterised by an attempt to breathe life into the abstract Treaty provisions on Union citizenship by granting equal access to social benefits for various categories of economically inactive citizens irrespective of the limits laid down in secondary legislation. It would have been possible for the Court to decide the Dano case differently under recourse to the argumentative arsenal of these judgments.

That did not happen. For more than a decade, the ECJ had ignored the arguments put forward by his most outspoken academic critic, Kay Hailbronner – but they now dominate its reasoning on why citizens like Ms Dano cannot claim social benefits. This presents us with a noteworthy shift of emphasis from a promise of equality inherent in EU citizenship towards the ‘limitations and conditions’, which primary law had always provided for (Art. 21.1 TFEU). Judges abandon the aspirational underpinning of the citizenship concept to the benefit of conventional doctrinal arguments such as the wording or the systematic structure. In short, the Court turns into a legal technician.

Anuscheh Farahat criticises the Court’s outcome and, yet, she follows a similar path as the ECJ, when she argues that the technical rules on inter-state social security coordination mandated a different outcome. It is not convincing to maintain that this specialised field of secondary law should have defined the answer, not least since doing so would have required the Court to disconnect the interpretation of the non-discrimination principle in Article 4 of Regulation (EC) Nr. 883/2004 from primary law. A fundamental question, such as this one, should be answered primarily on the basis of the EU Treaties and the citizenship concept – even by those who disagree with the Court’s conclusion.

It seems to me that the outcome of the Dano case is no coincidence. Judges in Luxembourg are not autistic and listen to the general political context. The Pringle judgment on the compatibility of the ESM Treaty with the rules on monetary union was a case in point – and the same held for the Förster ruling, in which the Court shied away from open conflict with the EU legislator, when it accepted a five-year waiting period for access to study grants for incoming EU students in line with the Free Movement Directive. The Grand Chamber deciding the Dano case will have considered potential implications of its judgment for the overall support for the integration project at a time, when eurosceptic political parties are on rise across the continent, not only in the United Kingdom. Continue reading

The End of Free Movement of persons? The CJEU Decision in Dano

Dr Iyiola Solanke

In January 2014, I wrote a post discussing the plans of the UK Coalition government to withhold some benefits from ‘jobless’ EU migrants. I suggested that this group would be hard to define and that the most obvious persons to fall into this category would be those who are not only unemployed but also for some reason unemployable, such as Wadi Samin, an Austrian army veteran deemed permanently unable to work due to ill health. In Dano, the Grand Chamber of the CJEU seems to have confirmed that this is indeed the case. This decision has been welcomed by leaders including but not limited to David Cameron. However, it does not place major new restrictions on the right of free movement – rather it provides a welcome affirmation of the existing restrictions in the Treaties and secondary legislation. It does this by establishing that ‘sufficient resources’ in Article 7 of the Citizenship Directive refers to ‘own’ resources.

Ms Dano grew up in Romania but migrated to Germany where her 2-year old son, Florin, was born in 2009. Both are Romanian nationals. She settled in Leipzig with her sister and was issued with a permanent residence card in July 2011. She received no support from the child’s father but in addition to help provided by her sister, Dano received child benefit for her son, as well as an additional amount in maintenance payments. (totalling around EUR 317 per month). In 2011 she applied for a series of basic provision benefits (‘Grundsicherung’) provided under German legislation to jobseekers – subsistence benefit (‘existenzsichernde Regelleistung’) for herself, social allowance (‘Sozialgeld’) for her son as well as a contribution to accommodation and heating costs. This application was refused, as was a second application in 2012. An administrative challenge to the 2012 decision, based on Article 18 and 45 TFEU, failed. It was held that she was not eligible to receive these benefits under the relevant German legislation (Paragraph 7(1) of SGB II and Paragraph 23(3) of SGB XII).

She subsequently brought an action before the Social Court in Leipzig, challenging the refusal to grant these basic benefits. The Leipzig Court, although it agreed with the decision under appeal, was unsure that the German provisions were compatible with EU law, in particular the general principle of non-discrimination resulting from Article 18 TFEU, the general right of residence resulting from Article 20 TFEU and Article 4 of Regulation No 883/2004. It therefore referred four questions to the CJEU.

Question 1: the scope ratione personae of Article 4 Regulation No 883/2004

The first question concerned the scope ratione personae of Article 4 Regulation No 883/2004, which replaced Regulation No 1408/71 from 1 May 2010.  Article 4, headed ‘Equality of treatment’, provides:

‘Unless otherwise provided for by this Regulation, persons to whom this Regulation applies shall enjoy the same benefits and be subject to the same obligations under the legislation of any Member State as the nationals thereof.’

Having decided that the basic provision benefits sought were ‘special non-contributory cash benefits’ (within the meaning of Article 70(2) of Regulation No 883/2004) the Leipzig Court asked whether such benefits were covered by Article 4. The Grand Chamber confirmed that they did. Continue reading

Very private lives: “acceptable questioning” in sexual orientation asylum cases

Anita Davies

The CJEU’s judgment in the case of A, B and C is due by the end of the year. Ahead of the expected judgment, this post recaps the opinion handed down by Advocate General Sharpston in July.

In February 2014 The Guardian published details of the lines of questioning used by the UK Home Office in questioning gay and lesbian asylum seekers. The questions considered appropriate to ask vulnerable asylum seekers were shocking; including queries such as “what is it about men’s backsides that attracts you?”.

The Home Office’s prurient interest in the very private lives of asylum seekers has been attributed in part to the Supreme Court judgment in HJ (Iran) and HT (Cameroon) v Secretary of State for the Home Department [2010] UKSC 31, where the Court found that asylum could not be refused on the basis that an individual would not face persecution due to their sexuality if they behaved with discretion when returned. The onus in questioning therefore shifted from conditions facing gay communities in the country of return to proving sexual orientation, resulting in the Home Office seeking to verify sexual orientation via intrusive questioning. Verifying sexual orientation in asylum claims is an issue that a number of EU states have sought to deal with, and Advocate General Sharpston’s opinion in ABC constitutes guidance as to what is considered acceptable questioning. However, as will be seen below, Sharpston’s opinion has to grapple with the central problem: how do you legally “verify” human sexuality? By its very nature sexuality is impossible to “prove” by reference to anything other than what an individual considers their sexuality to be.

  1. B and C were individuals who submitted asylum claims to the Netherlands authorities on the grounds of a well founded fear of being persecuted in their respective countries of origin because they were gay men. All were refused on the basis that their claims of sexual orientation were not “credible”. Two of the applicants had gone to some lengths to prove their sexual orientation: C had submitted a video depicting him performing sexual acts with a man, and A had been willing to submit to a test to prove that he was gay.

In her opinion, Advocate General Sharpston sought to set out some guidelines as to what was an appropriate method for assessing declared sexual orientation, and if the limits were different from the limits applied to an assessment of the credibility of other grounds of persecution. Sharpston recognised that an “individual’s sexual orientation is a complex matter, entwined inseparably with his identity, that falls within the private sphere of his life” [38], therefore, an applicant’s averred sexual orientation must always be the starting point in assessing a claim, however:

The competent national authorities are entitled to examine that element of his claim together with all other elements in order to assess whether he has a well-founded fear of persecution within the meaning of the Qualification Directive and the Geneva Convention.

It therefore follows ineluctably that applications for refugee status on the grounds of sexual orientation, like any other applications for refugee status, are subject to a process of assessment as required by Article 4 of the Qualification Directive. That assessment must, however, be carried out in a way that respects the individual’s rights as guaranteed by the Charter.” [48 -49]

Continue reading

Supranational Organizations as Administrative Governance (and the issue of constraints on scope of authority delegable to the European level)

Prof. Peter Lindseth

I have a new piece posted on SSRN that may be of interest to readers. Entitled ‘Supranational Organizations’, it will appear in the Oxford Handbook of International Organizations (Ian Hurd, Ian Johnstone and Jacob Katz Cogan, eds., forthcoming 2015). This chapter elaborates on the argument (made previously, for example, here and here) that supranational bodies – more specifically those of the EU – are best understood as extensions of modern administrative governance rather than as incipient democratic and constitutional bodies in their own right. The full chapter may be downloaded here. Below, however, are the closing paragraphs, which explore whether, as a consequence of their fundamentally administrative character, supranational bodies in Europe should be subject to some form of constraints on the power delegable to them, a question that goes directly to the administrative-constitutional distinction:

The problem with a “constitutional” framework for understanding European integration is that it ignores any limitation on the scope of authority delegable to the supranational level. It assumes European supranationalism can legitimize an ever-increasing range of regulatory powers in autonomously democratic and constitutional terms, as if supranational institutions are or could be a site of such authority in their own right, apart from the member states that created them. Even for the most sophisticated “constitutional” theorists of the EU, the evolution of European public law and supranational authority ultimately is a question of the functional demands of interdependence as they perceive them (Maduro 2012). Given the demands of the Eurozone crisis, this ultimately functionalist understanding suggests that the Eurozone crisis should have automatically led to both to greater fiscal capacities as well as an intensification of democratization and constitutionalization at the supranational level (Habermas 2013). This purely functionalist approach, however, ignores the complex interplay between the various dimensions of institutional change, not just functional (need), but also political (interests) and cultural (conceptions of right), as well as the ensuing process of contestation, reconciliation, and settlement (cf. Lindseth 2010, 13–14). This failure to account for the full complexity of institutional change leads to a temptation to view European legitimacy as primarily a matter of institutional engineering, most often revolving around more powers for the European Parliament (see, e.g., European Commission 2013).

By contrast, an historical-constructivist understanding of the EU as a denationalized form of administrative governance is deeply cautious about such engineering and, in view of the complex process of institutional change, stresses the ultimate constraints on the scope of authority delegable to the supranational level. Such supranational delegation constraints are analogous, I would maintain, to similar constraints that exist in national administrative states, expressed in such doctrines as the Italian riserva di legge, the German Vorbehalt des Gesetzes, or the American “nondelegation doctrine” (Lindseth 2014, 553, 556). Given the fundamentally administrative character of the European integration, the EU (qua [supranational organization (SNO)]) can sustain a great deal of autonomous regulatory power; nevertheless, there are limits to what it can reasonably sustain given the lack of autonomous democratic and constitutional legitimacy. Continue reading

The Price is Not Right: Italian Troubles with Road Haulage and Tobacco Pricing

Angus MacCulloch, Lancaster University Law School

Two recent judgments handed down by the CJEU show how difficult it can be for a Member State to involve itself in fixing minimum prices for products. Given the ongoing challenge to minimum alcohol pricing in Scotland it is interesting that in both these cases the Court ruled against the fixing of prices, but for very different reasons. Neither case is directly analogous to the Scots alcohol MUP referred to the Court in Case C-333/14, but there are perhaps lessons that can be learnt.

Road Haulage

The first of the Italian cases is the least similar to the ongoing UK dispute, but it does indicate an important aspect of the wider problem with Member States interfering in markets. Cases C-184, 187, 194, 195 & 208/13 API and Others (ECLI:EU:C:2014:2147) concern a request for a preliminary ruling regarding the Italian Ministry for Infrastructure and Transport’s measures which fix minimum operating costs for carriage of goods by road. Charges payable by road haulage customers in Italy could not be lower than the minimum operating costs, and they therefore operated as a minimum price for services. The legislative provisions delegated the setting of the minimum operating costs to the Osservatorio; a group drawn from State, industry and stakeholder representatives. Its role was to ‘ensure the protection of road safety and the proper functioning of the market in the road haulage of goods’. The question the Court addressed was whether the fixing of prices by the Osservatorio could be compatible with EU law on the ground that it ensured road safety standards.

The Court first considered the nature of the measure itself – was it a public law measure, or a private arrangement? This is central to the applicability of EU competition law to the measure in question. Art 101 TFEU, when read in conjunction with Art 4(3) TFEU, applies where a Member State ‘requires or encourages’ anti-competitive agreements, or where it ‘divests its own rules of the character of legislation by delegating to private operators responsibility for taking decisions affecting the economic sphere’ [29]. Competition law does not apply to the legislative action of a Member State, as the Court makes clear in para [30]:

“where legislation of a Member State provides for road-haulage tariffs to be approved and brought into force by the State on the basis of proposals submitted by a committee, where that committee is composed of a majority of representatives of the public authorities and a minority of representatives of the economic operators concerned and in its proposals must observe certain public interest criteria, the fixing of those tariffs cannot be regarded as an agreement, decision or concerted practice between private economic operators”.

Even if the private parties were a majority on such a committee it would not affect the public nature of a measure ‘provided that the tariffs are fixed with due regard or the public-interest criteria defined by law’ [31]. However, on the evidence, it was clear that the Osservatorio was, in effect, a type of trade association. Eight of the ten members were industry representatives taking decisions by majority of its members; the State having no right of veto or casting vote [32-33]. The criteria upon which the Osservatorio operated were also problematic; its ‘guiding principles’ didn’t feature ‘any provision such as to prevent the representatives of the professional organisations from acting in the exclusive interest of the profession’ [35]. As to the road safety justification, the Court noted the legislation, ‘makes vague reference to the protection of road safety and, moreover, leaves a very large margin of discretion and independence to the members of the Osservatorio’ [37]. It therefore concluded, at para [38], that:

“In those circumstances, the national legislation at issue in the main proceedings does not contain either procedural arrangements or substantive requirements capable of ensuring, that, when establishing minimum operating costs, the Osservatorio conducts itself like an arm of the State working in the public interest”.

Having established that Art 101 TFEU applied to the measure, the Court turned to its potential for justification under Art 101(3). It rejected application of the Art 101(3) exception on the basis that while road safety may be a legitimate objective the fixing of costs was not ‘appropriate, either directly or indirectly, for ensuring that the objective is attained’ [51]. The measures also went beyond what was necessary as they did not allow carriers to prove that, although they charged lower prices, they fully complied with safety provisions [55]. The fixing of minimum costs could therefore not be justified.


The second case turns away from direct price fixing to a more indirect route: the taxation of tobacco products. In Case C-428/13 Yesmoke Tobacco (ECLI:EU:C:2014:2263) the Court considered the compatibility of the Italian rules setting excise duty on cigarettes. Those cigarettes with a lower retail price lower than brands in the most popular price category were charged a duty at 115% of the basic amount. This meant that the cheapest cigarettes, when compared with the most popular brands, were charged a slightly higher level of excise duty. With this higher level of duty their comparative price advantage was, at least partially, removed. It will not be a surprise to anyone that tobacco products are highly regulated in the EU, and that the protection of public health plays a significant role in that regulation. The relevant EU law is found in Directive 2011/64/EU which governs excise duty on tobacco products. The purpose of that Directive is to ensure the proper functioning of the internal market and neutral conditions of competition [23]. This reference to ensuring ‘neutral competition’ on the tobacco market became crucial to the rest of the judgment. The Directive draws a distinction between different types of tobacco product, for instance cigars and cigarettes, but treats all cigarettes as a single category without distinction. The Court made it clear, at para [31], that Member States, when imposing an excise duty, should not act in way which ran ‘counter to the objectives of that directive’:

“The establishment of different minimum tax thresholds according to the characteristics or price of cigarettes would lead to distortions of competition as between different cigarettes and would therefore be contrary to the objective pursued by Directive 2011/64 of ensuring the proper functioning of the internal market and neutral conditions of competition”.

Italy tried to rely on the public health objective to justify the imposition of the duty. The Court noted that the Directive already takes into account public health, at recitals 2, 14, and 16, and that the framework put in place by the Directive ‘does not prevent the Member States from taking measures to combat smoking and to ensure a high level of protection for public health by levying excise duties’ [36]. In that light the Court therefore ruled that the Directive precluded the setting of a differential rate of excise for a class of cigarettes based on their retail price.

It was clear in this case that the EU legislation took into account the health concerns in relation to tobacco and allowed the imposition of excise duty likely to discourage the consumption of tobacco; the Directive therefore did ‘not prevent’ health protection. But the Directive was also designed to ensure ‘neutral competition’ within the remaining market for tobacco products. The differential tax rate, which attempted to subvert normal price competition, was clearly then contrary to the purpose of the Directive.

Lessons for Minimum Alcohol Pricing

It is clear that the Scots MUP measure is not a disguised cartel, where the drinks industry’s attempts to set prices is given the protection by the State through legislation. But that does not mean that the API & Others is irrelevant to the ongoing SWA case. There is a clear connection between all three cases.

One of the questions raised in SWA regards the compatibility of MUP with Regulation 1308/2013 which governs, inter alia, the common market in wines. Art 167(1)(b) of the Regulation is particularly relevant as it prohibits Member States from laying down market rules which ‘allow for price-fixing’. On the face it of this could mean that the Scottish Parliament are constrained from introducing a minimum price for wine, in the same way as the Italian State was in relation to the imposition of a differential excise duty in Yesmoke. But if one considers Art 167 in context there is an argument that the apparently stark prohibition is more nuanced. The Regulations recitals make it clear that Producers Organisations and Interbranch Organisations (made up of producers and other industry stakeholders), as recognised in the Regulation, are to play a role in the organisation of the market; much as the Osservatorio did in Italian road haulage. It is not a surprise that the Regulation is clear that the rules in the common market, perhaps promulgated by way of a decision taken by an interbranch organisation (see Art 167(1)), should not relate to pricing. When read in this context it is not clear that the Regulation intends a bar on Member States adopting pricing controls unrelated to the common market organisation rules; i.e. where they are put in place for an entirely separate purpose.

Another interesting distinction between the Yesmoke and the SWA case is the fact that the tobacco Directive clearly has public health concerns at its forefront, and as the Directive had taken those concerns into account Italy was required to stay clearly within the terms of Directive. That is not the case in relation to the common market in wines. Health is mentioned in the Regulation, but only in relation of the production of foodstuffs, not in the wider public health concern that stems from the ‘hazardous and harmful’ consumption of alcohol. It would appear therefore that the Scottish Government may be able to argue that their separate concern for public health is outwith the terms of the Regulation and should be handled under the free movement provisions of the TFEU.

On really responsive rule-making? The EU-US Transatlantic Trade and Investment Partnership (TTIP) negotiations

Dr. Elaine Fahey

Senior Lecturer, The City Law School, City University London

The script

The EU and US have now completed six rounds of negotiations on the Transatlantic Trade and Investment Agreement (TTIP), the trade agreement under negotiation between the EU and US to cut trade barriers and ‘behind the borders’ barriers (technical regulations, standards, approvals) in a wide variety of sectors. It is touted as having the potential to become the global trade standard. Already, the epitaph is alleged to have been written on the Agreement. Yet while this misses the mark as to the theatre of global rule-making, on the other hand, scepticism is not unwarranted. It has at times appeared as an extraordinary experiment in rule-making1. TTIP harbours ambitions to grow as a living regulatory entity. It has become rife with controversy, for its secrecy, for its possible inclusion of the Investor Settlement Dispute Mechanism (ISDM) and its impact on EU regulatory standards. Some have even tried to stop the negotiations using EU law itself, in the form of a failed European Citizens Initiative.

The history of transatlantic relations is littered with many failed attempts to integrate EU and US legal order through mutual recognition, even in very limited fields. TTIP had been poised to shake up this dynamic. It has become an exercise in ‘really responsive rule-making’. However, many questions remain about international negotiations and the standard of what is and should be ‘really responsive EU rule-making’:- I reflect on its script, production process and the cast of actors.

The production process

Most EU-US rule-making processes in the past has been conducted firmly behind closed doors, in inscrutable so-called ‘Dialogues’, in a range of fields that many will never have heard of. They traditionally privileged industry. The TTIP negotiations have marked an enormous shift in EU-US rule-making. Continue reading