Tag Archive: ECJ

The EU Sovereign Debt Crisis: Some Legal Causes

A lot of attention surrounding the EU sovereign debt crisis has ostensibly focused on the allocation of blame to Member-States individually, often leaving out the EU institutions themselves. Responsibility for the current financial situation does in large part reside with the more indebted EU states such as Greece, Spain, Italy, and Ireland. However, there are additional causes that also deserve some of the attention.

The Treaty of the European Union (TEU) created the Eurozone and the European Central Bank (ECB). This final level of economic integration completed the three stage monetary and economic union that began in 1990. As the introduction of the Euro drew near, legitimate concerns were being raised by Member States regarding the economic stability of this new Eurozone. In response, the Stability and Growth Pact (SGP) was adopted in 1997. A specific resolution of the SGP, formally recognized as Council Regulation (EC) No 1467/97, implemented a targeted deficit reduction procedure for member-states that possessed excessive debt, imposing a deficit limit, an overall debt limit, and empowered the ECB to levy fines for non-compliance. However, the SGP has been inadequately enforced since its adoption. Such inadequate enforcement of the SGP may very well underlie the troubling economic situation the EU finds itself in today.

The most striking example of this questionable attitude toward the SGP came in November 2003, when the European Council (EC) chose not to implement recommendations of the European Commission (Commission) pursuant to the national budgets of two Member States. France and Germany’s national did not conform to SGP standards and the EC decided against enforcing SGP deficit reduction procedures previously agreed upon. This controversy eventually arrived at the European Court of Justice (ECJ). The Commission raised the issue that the EC’s failure to enforce the SGP’s debt re-structutring mechanisms against the Member States of Germany and France. Although the ECJ did rule against the EC for its refusal to pursue the SGP’s enforcement mechanisms, the checks and balances between EU institutions have been called into question and the authoritativeness of the SGP has been seriously undermined.

For example, the ECJ stated that the EC “cannot break free from rules laid down by Article 104 TEC and those for which it set forth for itself in Regulation No. 1467/97(SGP)”. Article 104 of the Treaty of the European Community (TEC) codifies the discretion of EC to assess a Member-State’s debt [104(6)], make recommendations on remedying that debt [104(7)], and the procedures for non-compliance [104(9)]. However, the SGP subsequently stipulated additional procedures to be implemented against a Member State in the case of non-compliant debt structure. The ECJ opinion alludes to an interesting question regarding the scope of the relationship between Art 104 TEC and the SGP. Understandably, however, they remind the parties that such a question “had not been presented”.

As Professor Larry Eaker of the American University of Paris has explained, this ECJ decision has potentially created a troubling conflict between the broad discretion afforded the EC in matters of economic and monetary policy, as expressed in Art. 104 TEC, and the monetary restrictions that were envisaged in the SGP. It would seem that the subsequent addendum of the SGP to the TEC would resolve this conflict just as a matter of chronology, but things are often never that simple.

The ECJ’s decision prompted subsequent legislation by the European Commission that intended to correct issues raised in the 2004 Commission v. Council case. But the conflict between the EU institutions and Member States is certain to continue, given the lack of resolution concerning the scope of the SGP.


Should the European Union Regulate E-Cigarettes?

The European Parliament will soon vote on a proposal to revise the current Tobacco Products Directive.  The new directive would classify e-cigarettes as medicinal products. The directive would include a ban on menthol and other flavored cigarettes while requiring mandatory health warnings on the package. This would profoundly restrict present e-cigarettes users’ access to the product, specifically the access of children.

The European Union hopes to reduce the 700,000 deaths attributable to tobacco use across all member-states with the revision. There are not many studies discussing the health benefits or risks associated with e-cigarettes. The United Nations World Health Organization has said the safety of e-cigarettes “has not been scientifically demonstrated…and the potential risks they pose for the health of users remains undetermined.”  The Save E-cigs Campaign said the revision would condemn “Europe’s seven million e-cigarette users to a premature death.” Opponents of the revision claim regulation would raise costs, reduce innovation, and force millions back to tobacco use. Are e-cigarettes really saving lives as the opponents of the revision and certain studies claim? Does the European Union have the authority to enact broader regulation to the Tobacco Products Directive?

The European Court of Justice has stated that regulation on tobacco products to ensure a high level of health protection throughout the member-states is in accordance with the Treaties. Since science has yet to discover the long-term health risks associated with e-cigarette use, the European Union has a duty to regulate a product that could be doing more harm than good. The revision does not ban the product. It simply places them on the same platform as regular cigarettes. E-cigarettes had not gained popularity when the European Union passed the Tobacco Products Directive in 2001. Therefore, this revision is necessary to update the current concerns and trends of European consumers.

The NCAA, College Sports, Student Athletes, and Improper Benefits: Analyzing the Issue from an EU Context

Recently, Yahoo Sports published an investigational report on Nevin Shapiro, a former booster with the University of Miami,  for giving “improper benefits” to at least seventy two student-athletes, high school recruits, and coaches for eight years. The article states that the administration knew about the recurrent infractions and yet, turned a blind eye to the problem citing Mr. Shapiro’s major contributions to the athletic department as the main reason. In a summer in which the National Collegiate Athletic Association (NCAA) is investigating a number of major athletic programs for violations, the enormity of the Miami situation strengthens the calls for NCAA reform. Yet, there is no consensus on specific reforms, where opinions run the gamut from enacting harsher penalties for repeat violators to paying student athletes for their services. But questions remain as to whether the NCAA needs major reform and what would be the consequences of reform.  If we look across the Atlantic, does the EU have a model that the US could copy or adapt in its search for reform?

The NCAA is an organization of higher education institutions and conferences of these institutions, whose policy is to maintain “a clear line of demarcation between intercollegiate athletics and professional sports”. Each NCAA Division is led by a presidential committee comprised of university presidents, whose goal is to “promote and develop educational leadership, physical fitness, athletics excellence and athletics participation as a recreational pursuit”. As delegated by its constitution, the NCAA is a supra-governing entity whose functions have been handed over by member universities and conferences, which historically have not been able to effectively discharge these functions alone.  Sports scandals seem ubiquitous in the U.S. Yet, in Europe, where sports seem just as popular, scandals seem nearly unheard of. So,  how does the EU regulate sport?

Before delving into the regulations, an understanding of sports in the EU warrants an introduction. As in the United States, universities in the EU do field teams in various athletic competitions but there is a low emphasis placed on the priority of the competition.  On par with the high level university competition in American football and basketball,  private teams/clubs in major sports such as football have developed a tiered professional feeder system. The clubs recruit  and contract with adolescents with professional potential, develop their talents, and possibly implement the recruits into their professional team. This system displays similarities to feeder systems we see in Major League Baseball and the National Hockey League .

So with this understanding, how does the EU regulate sport? Prior to the entry into force of the Lisbon Treaty, the EU had no explicit powers to regulate athletics. But, the European Court of Justice (ECJ) disagreed that sport was autonomous from EU oversight and viewed sport as being encompassed within the Treaty as an economic activity (See Walrave and Koch, Case 36/74 [1974] ECR 1405). In Union Royale Belge des Sociétés de Football Association ASBL v Jean-Marc Bosman, the ECJ recognized the fundamental right of movement of athletes in sport by invalidating a rule preventing a footballer from transferring to another club after his contract had expired without the consent of the original club (Case C-415/93 [1995] ECR I-4921). Yet, the ECJ has recognized that a sport does present a unique situation, where latitude must be given to the regulatory bodies in order to maintain effective competition and fairness in its administration. In Deliége v Ligue de Judo, the ECJ reasoned that when a national federation for a sport selects individuals for international competition, it may hurt the economic interests of those who were not selected but rules and criteria for selection are necessary in high level international competition (Cases C-51/96 & C-191/97 [2000] ECR I-2549). In Meca-Medina and Majcen v Commission, the ECJ upheld a two year ban on two swimmers for failing a drug test stating that even though the intent of a regulation is not economic, the true test is whether it exerts economic effects (Case C-519/04 P [2006] ECR I-6991). Yet, the ECJ recognized the special characteristic of sports by recognizing that adverse effects of doping penalties are inherent in the necessity of maintaining fairness in competition.

As of December 1, 2009, the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU) granted sports formal status. Specifically, Article 165 of the TFEU stated that the EU “shall contribute to the promotion of European sporting issues, while taking account of the specific nature of sport, its structures based on voluntary activity and its social and educational function.” Article 165(2) aims to “develop[] the European dimension in sport, by promoting fairness and openness in sporting competitions and cooperation between bodies responsible for sports, and by protecting the physical and moral integrity of sportsmen and sportswomen, especially the youngest sportsmen and sportswomen.”

Being enabled by the rules as set forth by the treaties and the ECJ, the European Commission for sports published in 2007 a white paper containing a number of actions and justifications intended to guide its activities related to sports. This white paper presents an analysis of the broad impact that sports has on the EU and raises a number of issues of concern in sports such as the fundamental freedom of movement and the protection of minors.

What impact do these rules have on sport in the EU? It appears that controversies and regulations involving sports are placed under a balancing test, where the athletic economic and non-economic interests are weighed against the interest for fairness and openness in competition as well as the social functions that sport serves. These interests are not necessarily antagonistic and the uniqueness of sport does require a level of understanding that goes beyond economic effects, even though economic effects do play a strong role into the equation.

So within this paradigm, how would the EU handle the NCAA’s current predicament? Where should the balance lie between the economic interest of a student-athlete and the maintenance of fairness and openness in competition? Would the EU disagree with the NCAA absolute prohibition on “benefits” being given to student-athletes or would the EU view this as a protection on the interests of students from individuals such as Mr. Shapiro? We have to remember that the face of college sports has changed to a large extent, where major industries have developed around collegiate sports. One commentator claims that amateur college sport is now packaged and sold in a “professional” wrapping and potential reforms to the NCAA should account for this. How would the EU view this analysis? To this extent, what impact should the universities’ economic effects play into this balancing test? In particular, does a booster for a university inherently create a conflict of interest? Would forcing an athlete into a particular league violate the internal market of the EU or is this a protection of the moral integrity of the student-athletes? In the end, the NCAA system of regulation and sports regulation within the EU do not harmonize together in their specific function but from a policy context, a fresh look from another point of view may present new insight into a particularly complex problem.

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