Limits to the Union’s ‘Internal Market’ Competence(s)
UniversityPressScholarshipOnline
OxfordScholarshipOnline
TheQuestionofCompetenceintheEuropeanUnion
LoïcAzoulai
Printpublicationdate:2014
PrintISBN-13:9780198705222
PublishedtoOxfordScholarshipOnline:April2014
DOI:10.1093/acprof:oso/9780198705222.001.0001
LimitstotheUnion’s‘InternalMarket’Competence(s)
ConstitutionalComparisons
RobertSchütze
DOI:10.1093/acprof:oso/9780198705222.003.0011
AbstractandKeywords
ThischapterexaminestheinternalmarketcompetenceoftheUnitedStatesandtheEU.It
firstconsiderstheAmericaninternalmarketcompetence—the‘CommerceClause’which
allowsCongresstoregulateCommerceinseveralstatesandhasbeenthechief
competencetoderegulateandre-regulatetheAmericanfederalmarket.Itthenanalyses
theEU'sinternalmarketcompetence,showingthatArticle114TFEUhas—liketheUS
‘CommerceClause’—beengivenan(almost)unlimitedscope.BoththeAmericanandthe
Europeaninternalmarketpowershaveencounteredsomepoliticalandlegallimits,and
thechaptercomparestheseconstitutionallimitations.
Keywords:EUlaw,USlaw,internalmarketcompetence,CommerceClause,federalregulation
Introduction
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Limits to the Union’s ‘Internal Market’ Competence(s)
Theenumerationprincipleformstheconstitutionalcoreofeveryfederation,and
structuresthedivisionofpowersintheUnitedStatesandtheEuropeanUnion.1 Federal
constitutionstherebypresentapictureofthematicallylimitedcompetences.Yetthis
pictureis—partly—misleading.Manyfederalunionsenjoyafunctionalcompetencethat
cutshorizontallyacross(almost)allotherpolicyareas.Thiscompetencetypicallyrelates
totheestablishmentandfunctioningofaUnion-widemarket.Theadvantagesofan
economic‘unityindiversity’wereidentifiedearlyonbytheAmericanfoundingfathers:
[a]​nunrestrainedintercoursebetweentheStatesthemselveswilladvancethe
tradeofeachbyaninterchangeoftheirrespectiveproductions,notonlyforthe
supplyofreciprocalwantsathome,butforexportationtoforeignmarkets.The
veinsofcommerceineverypartwillbereplenished,andwillacquireadditional
motionandvigorfromafreecirculationofthecommoditiesofeverypart.
Commercialenterprisewillhavemuchgreaterscope,fromthediversityinthe
productionsofdifferentStates.2
(p.216) TradeandcommercewereconsequentlyofcentralconcerntotheFederation.
Thefreecirculationofcommoditieswouldincreasethewealthofthe‘nation(s)’.3The
samepointwouldbemade,almost200yearslater,ontheothersideoftheAtlantic:
[t]​heobjectofaEuropeancommonmarketshouldbetocreateavastzoneof
commoneconomicpolicy,constitutingapowerfulunitofproductionandpermitting
acontinuousexpansion,anincreasedstability,anacceleratedraisingofthe
standardofliving,andthedevelopmentofharmoniousrelationsbetweenits
MemberStates.Toattaintheseobjectives,afusionoftheseparatemarketsisan
absolutenecessity.4
BothUnion-widemarketswouldhavetobecreatedbyfederallawaimingtoestablisha
degreeoflegal‘unity’amidstthediversestatemarkets.5Buttowhatextentshouldsuch
legalunitybecreatedthroughfederallegislation?Wouldanydiversityamongstatelaws
—like‘labourlaw’or‘publichealthlaws’—underminefreecommerceandtrade?
TheseconstitutionalquestionshavebeenraisedintheUnitedStatesandtheEuropean
Union,andthisChapterwishestoanalysetheirrespectiveanswers.SectionIstartswith
the—older—American‘internalmarket’competence:the‘CommerceClause’.Thelatter
allowsCongress‘toregulateCommerce...amongtheseveralStates’.6Ithasbeenthe
chiefcompetencetoderegulateandre-regulatetheAmericanfederalmarket.7The
EuropeanUnion’sinternalmarketcompetence(s)willbeanalysedinsectionII.Weshall
seeherethatArticle114TFEUhas—liketheUS‘CommerceClause’—beengivenan
(almost)unlimitedscope.Nonetheless:boththeAmericanandtheEuropeaninternal
marketpowershaveencounteredsomepoliticalandlegallimits,andsectionIIIwill
comparetheseconstitutionallimitationsbymeansofa‘Conclusion’.
I.The‘InternalMarket’CompetenceintheUnitedStates
Oneofthecentraltasksofthe1787USConstitutionhadbeenthecreationofaninternal
market.Theabilityofthestatestocreateobstaclestotradehadbeenobstructivefor
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Limits to the Union’s ‘Internal Market’ Competence(s)
federalcommerce,8andthe(second)AmericanConstitution(p.217) therefore
providedCongresswiththepower‘toregulateCommerce...amongtheseveralStates’.9
ThisprovisionwouldsoonprovetobethebroadestpoweroftheAmerican
Federation.10However,thescopeofthispowerhadtobelimited.Eventhemost
‘nationalist’readingoftheConstitutioncouldnotdenythis:federalpowerswere
enumeratedpowers;and‘enumerationpresupposessomethingnotenumerated’.11 But
wherewouldinterstatecommercebeginandintrastatecommerceend?Whatwerethe
constitutionalorpoliticallimitstotheAmerican‘internalmarket’competence?These
questionshavereceiveddifferentanswersintheconstitutionalhistoryoftheUnited
States.
1.The‘CommerceClause’beforethe‘NewDeal’:internalandexternalconstitutionallimits
Intheearlyhistoryofthe‘CommerceClause’,theSupremeCourthaddevisedtwo
strategiestorestrictthisUnioncompetence.Thefirststrategywastodevelopinternal
limitationstothecompetence.Thiswascomplementedbyasecondstrategythatwould
imposeexternalboundariestothe‘CommerceClause’.
WefindagoodillustrationofthefirststrategyinHammervDagenhart.12Wouldthe
‘CommerceClause’generallyallowtheFederalGovernmenttoprohibitorbaninterstate
commercewithregardtoaproduct?The‘FederalChildLaborAct’hadaimedat
standardizingtheagesatwhichchildrencouldbeemployedinminingandmanufacture.
And,intheabsenceofaspecificpowertoregulateworkinghours,Congresshadusedits
generalcompetenceunderthe‘CommerceClause’bysimplyprohibitinginterstate
commerceinthosegoodsthatsharedinthe‘originalsin’ofchildlabour.Would‘the
powertoregulategiventoCongressincidentallyinclude[]theauthoritytoprohibitthe
movementofordinarycommodities’?13TheSupremeCourtdidnotthinkso.It
invalidatedthefederallaw,sinceitcouldnot(p.218) beshowntohaveanypositive
effectoninterstatecommerce.Thepowertoregulatecommercewas‘directlythe
contraryoftheassumedrighttoforbidcommercefrommovingandthusdestroyingitas
toparticularcommodities’.14Thepowertoregulatecommercewasapowerto‘regulate’,
notto‘prohibit’.15Couldthe‘CommerceClause’nonethelessbeusedtoremove
distortionsofcompetitionflowingfromdisparitiesinstatelabourlaws?TheCourt
categoricallyrejectedthisview.16
Moreimportantwasasecondlimitationstrategyappliedtothe‘CommerceClause’.It
wasinformedbytheideathatthe1787Constitutionhadsplittheatomofsovereignty,17
andhadestablishedagovernmentalsystemofdualfederalism.‘TheUnitedStatesare
sovereignastoallthepowersofGovernmentactuallysurrendered:EachStateinthe
Unionissovereignastoallthepowersreserved.’18‘[T]​hepowersoftheGeneral
Government,andoftheState,althoughbothexistandareexercisedwithinthesame
territoriallimits,areyetseparateanddistinctsovereignties,actingseparatelyand
independentlyofeachotherwithintheirrespectivespheres.’19Thephilosophyofdual
federalism,whileadvocatingtheideaofautonomousfederalpowers,thusinsistedonthe
ideaof‘impliedlimitations’.20Whatweretheseimplied—external—boundariesthatwere
limitingthe‘CommerceClause’?Priortothe‘NewDeal’,theSupremeCourtheredrew
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Limits to the Union’s ‘Internal Market’ Competence(s)
ontheideaofexclusivestatepolicepowers.
WefindagoodillustrationofthistypeofreasoninginUnitedStatesvKnight.21 Thecase
involvedachallengetothe1890‘Sherman(Antitrust)Act’,whichhadtackledunlawful
restraintsandmonopolies.TowhatextentcouldtheUnionregulatecompetitionlaw?The
SupremeCourtthoughtthat‘thepowerofastatetoprotectthelives,health,and
propertyofitscitizens,andtopreservegoodorderandthepublicmorals’was‘apower
originallyandalwaysbelongingtothestates,notsurrenderedbythemtothegeneral
government,nordirectlyrestrainedbytheConstitutionoftheUnitedStates,and
essentiallyexclusive’.‘Thereliefofthecitizensofeachstatefromtheburdenofmonopoly
andtheevilsresultingfromtherestraintoftradeamongsuchcitizenswasleftwiththe
states.’However,theCourtequallyrecognizedthatitwas
vitalthattheindependenceofthecommercialpowerandofthepolicepower,and
thedelimitationbetweenthem,howeversometimesperplexing,shouldalwaysbe
recognizedandobserved,for,whiletheonefurnishesthestrongestbondof
union,theotherisessentialtothepreservationoftheautonomyofthestatesas
requiredbyourdualformofgovernment.22
(p.219) Fromthis,theCourtconcludedthatsince‘commercesucceedsto
manufacture,andisnotapartofit’,23thefederalpowercouldnotextendtothe
regulationofthelatter.Theexclusivepowersofthestateswouldthuslimitthe(exclusive)
federalpowertoregulatecommerce.
2.The‘CommerceClause’afterthe‘NewDeal’:From‘constitutional’to‘political’
safeguards?
Reformsfollowcrises.The‘reformation’ofAmericanfederalismfollowedtheGreat
Depressionof1929.Thespiritofthetimewasthis:
[a]​r chitecturallywehaveanantiquatedframeofgovernmentwhenwelacknationwidepowertodealwithnation-wideconditionsthatcannotbedealtwitheffectively
bytheseveralstates.Itisabundantlyclearthatthestatescouldnotdomuchto
reviveagricultureandindustry.Ifitwereclearthatthenationbynational
regulationcoulddoalottoreviveandmaintainagricultureandindustry,itwould
thenbeclearthatthenationoughttohavethepowertodoit.24
TheeconomiccrisishadaffectedtheentireUnionmarket,andthusdemandedUnionwidesolutions.ToreinvigoratetheAmericaneconomy,aseriesofstatuteshadbeen
enactedtoregulatethefederalmarket.25(Yetthis‘newnationalism’wasfirstblockedby
adualfederalistSupremeCourt.26Thereformswerejudiciallyvetoed,anditwasonly
aftertheRooseveltadministrationthreatenedto‘pack’theCourt,thatthe‘switchintime
thatsavedthenine’endorsedthebirthofanewera.)Thesubsequent‘nationalist’reinterpretationofthe‘CommerceClause’graduallydiscardedanyinternalandexternal
limitationsaroundthatfederalcompetence.
WecanseethisnewconstitutionalspiritatworkinJones&Laughlin.27Thiscase
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Limits to the Union’s ‘Internal Market’ Competence(s)
concernedtheconstitutionalityofthe‘NationalLaborRelationsAct’(1935),whichhad
beenchallenged‘asanattempttoregulateallindustry,thusinvalidating(p.220) the
reservedpowersoftheStatesovertheirlocalconcerns’.28Initsjudgment,theCourt
abruptlyabandonedtheinterpretativeapproachthathadtriedtodistinguishbetween
‘commerce’and‘production’:
[t]​hecongressionalauthoritytoprotectinterstatecommercefromburdensand
obstructionsisnotlimitedtotransactionswhichcanbedeemedtobeanessential
partofa‘flow’ofinterstateorforeigncommerce.Burdensandobstructionsmay
beduetoinjuriousactionspringingfromothersources.Thefundamentalprinciple
isthatthepowertoregulatecommerceisthepowertoenact‘allappropriate
legislation’forits‘protectionoradvancement’;toadoptmeasures‘topromoteits
growthandinsureitssafety’;‘tofoster,protect,control,andrestrain.’Thatpower
isplenaryandmaybeexertedtoprotectinterstatecommerce‘nomatterwhatthe
sourceofthedangerswhichthreatenit.’Althoughactivitiesmaybeintrastatein
characterwhenseparatelyconsidered,iftheyhavesuchacloseandsubstantial
relationtointerstatecommercethattheircontrolisessentialorappropriateto
protectthatcommercefromburdensandobstructions,Congresscannotbe
deniedthepowertoexercisethatcontrol.29
Insteadofconcentratingonthethematicdistinctionbetween(interstate)commerceand
(intrastate)production,theCourthereconcentratedexclusivelyontheeffectsofthe
federallegislation.TheCourt’sneweffect-centredtesttherebycutacrossallthe
categoriesofdualfederalismthathadpreviouslytriedtoprotectexclusivestatepowers.
Focusingontheconsequencesandnotthe‘nature’ofactivities,thisnewtestcould
captureallactivities—even‘trivial’or‘local’ones—whoseaccumulativeeffectmightbe
‘farfromtrivial’.30Weretherethusnoexternallimitstothe‘CommerceClause’?Fora
time,noteventheTenthAmendmentappearedtoprovideanyexternalboundariesfor
the‘CommerceClause’.31 TheSupremeCourtindeedseemedtototallyabdicateits
judicialreviewfunctionbyrelyingonthe(p.221) theoryofthe‘politicalsafeguardsof
federalism’.32ThisnewreasoningisexemplifiedinGarciavSanAntonioMetropolitan
TransitAuthority:
[i]​tisnonoveltytoobservethatthecompositionoftheFederalGovernmentwas
designedinlargeparttoprotecttheStatesfromoverreachingbyCongress....The
StateswerevestedwithindirectinfluenceovertheHouseofRepresentatives
and...weregivenmoredirectinfluenceintheSenate,whereeachStatereceived
equalrepresentationandeachSenatorwastobeselectedbythelegislatureofhis
State.ThesignificanceattachedtotheStates’equalrepresentationintheSenateis
underscoredbytheprohibitionofanyconstitutionalamendmentdivestingaState
ofequalrepresentationwithouttheState’sconsent...Ofcourse,wecontinueto
recognizethattheStatesoccupyaspecialandspecificpositioninour
constitutionalsystemandthatthescopeofCongress’authorityunderthe
CommerceClausemustreflectthatposition.Buttheprincipalandbasiclimiton
thefederalcommercepoweristhatinherentinallcongressionalaction—thebuilt-
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Limits to the Union’s ‘Internal Market’ Competence(s)
inrestraintsthatoursystemprovidesthroughStateparticipationinfederal
governmentalaction.Thepoliticalprocessensuresthatlawsthatundulyburden
theStateswillnotbepromulgated.33
Thedenialofany—internalorexternal—constitutionalsafeguardsoffederalismwasthe
strongestexpressionofthe‘newnationalism’followingtheNewDeal.TheCourthereleft
thescopeofthe‘CommerceClause’completelyinthehandsofthefederallegislator.
However,thistheoryofthepoliticalsafeguardsoffederalismisdifficulttodefend; 34and
theSupremeCourt’scelebrationofjudicialpassivismwasindeednottolast.TheCourt
thusrevivedtheideaofsomeconstitutionalboundariesaroundthe‘CommerceClause’
inUnitedStatesvLopez.35Therespondenthadviolatedthe1990‘Gun-FreeSchoolAct’
byknowinglycarryingafirearmonschoolpremises,andchallengedthefederallawasan
unconstitutionalexerciseofthe‘CommerceClause’power.Reassertingtheimportanceof
judicialreview,theCourtemphaticallyconfirmedthatthe‘CommerceClause’‘issubject
toouterlimits’.36
Butwhereinlaythese‘outerlimits’?Systematizingitspastprecedents,theCourt
distinguishedthreeclassesoflegitimatefederallegislation:
[f]​irst,Congressmayregulatetheuseofthechannelsofinterstatecommerce.
Second,Congressisempoweredtoregulateandprotecttheinstrumentalitiesof
interstatecommerce,orpersonsorthingsininterstatecommerce,eventhough
thethreatmaycomeonlyfromintrastateactivities.Finally,Congress’commerce
authorityincludesthepowertoregulateactivitieshavingasubstantialrelationto
interstatecommerce.37
(p.222) Undoubtedly,itwasthisthirdclassoffederallawsthatwouldposethegreatest
threattothelegislativeautonomyofthestates.AndtheCourttherefore‘clarified’that
the‘CommerceClause’couldonlybeoffederalavailtoregulateaneconomicactivitythat
would‘substantiallyaffect’interstatecommerce.38
Thisfirst—internal—limitationwouldbejoinedbyasecondlimitationinNational
FederationofIndependentBusinessvSebelius.39Thecaseinvolvedachallengetothe
2010‘PatientProtectionandAffordableCareAct’.Thelatterrequiredallindividuals—
unlessexempted—topurchaseaminimumhealthinsurancepolicy.Theplaintiffsalleged
thattheindividualmandateexceededtheboundariesofthe‘CommerceClause’.The
Governmentobjectedthatthiswasnotthecase,sinceafailuretopurchasetheinsurance
wouldhave‘asubstantialanddeleteriouseffectoninterstatecommerce’.40This
argumentcharterednewconstitutionalterritory:thefederallawcompelledindividualsto
becomeactiveinthemarketonthegroundsthattheirinactivitywould(substantially)
affectinterstatecommerce.41 However,shouldthepowertoregulatecommercenot
‘presuppose...theexistenceofcommercialactivitytoberegulated’?TheSupremeCourt
indeedthoughtso:
[c]​onstruingtheCommerceClausetopermitCongresstoregulateindividuals
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Limits to the Union’s ‘Internal Market’ Competence(s)
preciselybecausetheyaredoingnothingwouldopenanewandpotentiallyvast
domaintocongressionalauthority.Everydayindividualsdonotdoaninfinite
numberofthings.Insomecasestheydecidenottodosomething;inothersthey
simplyfailtodoit.AllowingCongresstojustifyfederalregulationbypointingtothe
effectofinactiononcommercewouldbringcountlessdecisionsanindividualcould
potentiallymakewithinthescopeoffederalregulation,and—underthe
Government’stheory—empowerCongresstomakethosedecisionsforhim...The
propositionthatCongressmaydictatetheconductofanindividualtodaybecause
ofprophesiedfutureactivityfindsnosupportinourprecedent.Wehavesaidthat
Congresscananticipatetheeffectsoncommerceofaneconomicactivity.Butwe
haveneverpermittedCongresstoanticipatethatactivityitselfinordertoregulate
individualsnotcurrentlyengagedincommerce.42
Thepowerto‘regulate’commercethusdidnotentailthepowerto‘create’commerce.
Theindividualmandatecouldthusnotbebasedonthe‘CommerceClause’.
Wouldthepost-NewDealjurisprudencealsoseetherevivalofexternalconstitutional
limitstothe‘CommerceClause’?Judicialinterventionindeedrevivedinrelationtothe
TenthAmendment.Tomaintainthe‘etiquetteoffederalism’,43theFederalGovernment
wouldnotbeabletorelyonthe‘CommerceClause’to(p.223) ‘commandeer’the
‘StatesasStates’toimplementfederallaws.44Thus‘evenwhereCongresshasthe
authorityundertheConstitutiontopasslawsrequiringorprohibitingcertainacts,itlacks
thepowerdirectlytocompeltheStatestorequireorprohibitthoseacts’.45Whatwasthe
philosophybehindthisconstitutionalprohibition?‘Statesarenotmerepolitical
subdivisionsoftheUnitedStates.Stategovernmentsareneitherregionalofficesnor
administrativeagenciesoftheFederalGovernment.’Andhavingretaineda‘residuary
andinviolablesovereignty’,theUnioncouldnot‘compeltheStatestoenactoradminister
afederalregulatoryprogram’.46Thenon-commandeeringprinciplewouldthusexternally
limitthe‘CommerceClause’.Thelattercouldnotbeusedasaconstitutionalbasisto
forcethestatestoadopt‘harmonized’statelaws.
II.The‘InternalMarket’Competence(s)oftheEuropeanUnion
TheprincipalideabehindtheEuropean(Economic)Communitywasthecreationofa
‘commonmarket’.Thegradualunificationofnationalmarketswastobeachievedbytwo
complementarymechanisms.Inthefirstplace,theTreatiesthemselveswould‘negate’
certainnationalbarrierstointra-Europeantrade.47Asecondconstitutionalinstrument
was‘positiveintegration’.Europewouldbecompetenttoadoptlegislationforthe
‘approximationofthelawsofMemberStatestotheextentrequiredfortheproper
functioningofthecommonmarket’.48Theoriginalharmonisationcompetenceforthe
‘commonmarket’wascontainedinArticles115TFEU.49ItwastheEuropeanequivalent
ofthe(p.224) ‘CommerceClause’andallowedtheEuropeanUnionto‘issuedirectives
fortheapproximationofsuchprovisionslaiddownbylaw,regulationoradministrative
actioninMemberStatesasdirectlyaffecttheestablishmentorfunctioningofthecommon
market’.
Fromtheverybeginning,thescopeofArticle115TFEUappeared‘quitesimply
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Limits to the Union’s ‘Internal Market’ Competence(s)
unlimited’.50TheCourthadgivenwideinterpretationstotheconceptsof‘directive’and
‘approximation’,51 andhadconvenientlyswepttheneedtoshowthatnationallegislation
‘directlyaffect[ed]’thecommonmarketundertheconstitutionalcarpet.52The(almost)
unlimitedscopeoftheUnion’soriginalinternalmarketcompetencenonetheless
encounteredapoliticallimit.ForanyUnionlawadoptedunderArticle115TFEU
requirestheunanimousconsentoftheMemberStatesintheCouncil.Thispolitical
safeguardoffederalismwouldsubstantiallylimittheexerciseofthecompetenceinthe
Union’searlylife.53The1986SingleEuropeanActhowevergavetheUnion’s
harmonizationcompetencea‘brilliantassistant’:Article114TFEU.54Theconstitutional
neighbourtextuallywidenedtheUnion’sinternalmarketcompetence; 55and—
importantly—itnolongerrequiredaunanimousdecisionofallMemberStates.56Would
theriseofdecisionalsupranationalism—andtheconsequentdeclineinthepolitical
safeguardsoffederalism—inducetheCourttostrengthenthejudicialsafeguardsof
federalism?WouldtheCourtconsequentlydevelopinternalorexternalconstitutional
limitstotheUnion’s(supranational)internalmarketcompetence?
(p.225) 1.Internallimits:harmonizationfortheinternalmarket
a)Theconceptof‘approximation’or‘harmonization’
Wouldtheideaof‘approximation’or‘harmonization’conceptuallyrequirethepriorand
subsequentexistenceofnationallawsregulatingtradewithintheEuropeanmarket?57
Foralongtime,Europeanconstitutionalthoughtstronglylinkedtheconceptof
harmonizationtothesubsequentapproximationofnationallaws.Originally,thiswasthe
resultoftheharmonizationinstrumentofthe‘directive’.58DirectivesrequireMember
StatestoadoptnationallegislationthatwillimplementtheEuropeancommand.Theresult
ofadirectivewouldthusbe‘harmonized’nationalrules;anditseemedthatthe
subsequentexistenceofnationalruleswasaconceptualcharacteristicofthenotionof
harmonization.ThishoweverchangedwiththeSingleEuropeanAct,whichdecoupledthe
ideaofharmonizationfromthe‘directive’.TheUnioncouldhenceforthadoptany
measureunderitsinternalmarketcompetence,andthisincluded‘regulations’as
instrumentsofdirectUnionlegislation.59
Butwouldharmonizationmeasuresnothavetobeatleastgenerallyapplicable?Forhow
couldanindividualdecision—anexecutiveact—everharmonizenationallaws?In
GermanyvCouncil,60thisconstitutionaldelicacywasplacedonthejudicialtable.
Germanyarguedthatthepowerto‘harmonize’precludedtheexecutivepowerfrom
adoptingdecisions; 61 andsinceArticle9oftheProductSafetyDirectivegrantedsucha
powerincertainsituations,theprovisionhadtobevoid.62TheCourtheldotherwise:
[t]​hemeasureswhichtheCouncilisempoweredtotakeunderthatprovisionare
aimedat‘theestablishmentandfunctioningoftheinternalmarket’.Incertainfields,
andparticularly(p.226) inthatofproductsafety,theapproximationofgeneral
lawsalonemaynotbesufficienttoensuretheunityofthemarket.Consequently,
theconceptof‘measuresfortheapproximation’oflegislationmustbeinterpreted
asencompassingtheCouncil’spowertolaydownmeasuresrelatingtoaspecific
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Limits to the Union’s ‘Internal Market’ Competence(s)
productorclassofproductsand,ifnecessary,individualmeasuresconcerning
thoseproducts.63
Article114TFEUwouldthusentitletheUniontoadoptexecutivedecisions.(Yet,since
therulingdealtwithastate-addresseddecision,itsconstitutionalimpactmighthavebeen
confinedtothatcategory.)Yet,couldtheprovisionalsobeemployedforthe
establishmentofacentralizedauthorizationprocedureoperatedbytheCommissionor
eventhecreationoftheUnion’sownexecutiveinfrastructure?64
SubsequentjurisprudenceclarifiedthatArticle114couldindeedbeusedforboth
purposes.Fortheadoptionofdecisionsaddressedtoindividuals,thecausecélèbreis
UnitedKingdomvParliamentandCouncil.65Thecaseconcernedthevalidityof
Regulation2065/2003,whichtriedtoensuretheeffectivefunctioningoftheinternal
marketthroughaUnionauthorizationprocedure.Thelegislativemeasuredelegatedthe
powertograntorrejectauthorizationstotheCommission;anditsdecisionswere
addressedtotheindividualapplicant.66TheBritishGovernmentprotested:‘The
legislativepowerconferredbyArticle[114TFEU]isapowertoharmonisenationallaws,
notapowertoestablish[Union]bodiesortoconfertasksonsuchbodies,ortoestablish
proceduresfortheapprovaloflistsofauthorisedproducts.’67Yetinitsjudgment,the
Courtconfirmedthisverypower.68TheUnionlegislatorwouldenjoy‘adiscretion,
dependingonthegeneralcontextandthespecificcircumstancesofthemattertobe
harmonised,asregardstheharmonisationtechnique’.69ThisgrantedtheUnionan
(almost)totalfreedomwithregardtothe(p.227) formaltypeofharmonizationaction.
ThisfreedomofformcomplementedthesubstantivefreedomoftheUnionlegislator.For
theCourthasneveridentifiedtheconceptofharmonizationwitha‘medium’regulatory
standard,andindeedgrantstheUnionlegislatorawidesubstantivediscretion.70
WhataboutthepriorexistenceofnationallawsasapreconditionforArticle114TFEU?
ThisquestionwasthesubjectofSpainvCouncil.71 TheEuropeanlegislatorbelievedthe
nationalprotectionperiodformedicinalproductstobeinsufficient,andsawthis
insufficiencyaspenalizingEuropeanpharmaceuticalresearch.Ithadthereforecreateda
supplementaryprotectioncertificate,whichcouldbegrantedunderthesameconditions
asnationalpatentsbyeachoftheMemberStates.72Twomajorconstitutionalhurdles
seemedtoopposethelegalityofthisEuropeanlaw.First,Article114TFEUcould
theoreticallynotbeusedtocreatenewrightsasitcouldonlyharmonizeexisting
rights.73Secondly,atthetimeofitsadoptiononlytwoMemberStateshadlegislation
concerningasupplementarycertificate.
TheCourttookthefirsthurdlebyforce.ItsimplyrejectedtheclaimthattheEuropean
lawcreatedanewright.74Concentratingonthesecondhurdle,theCourtthen
addressedthequestionwhetherArticle114requiredthepre-existenceofdiverse
nationallaws.IntheeyesoftheCourt,thiswasnotthecase.TheUnioncoulduseits
internalmarketcompetence‘topreventtheheterogeneousdevelopmentofnationallaws
leadingtofurtherdisparitieswhichwouldbelikelytocreateobstaclestothefree
movementofmedicinalproductswithinthe[Union]andthusdirectlyaffectthe
establishmentandthefunctioningoftheinternalmarket’.75TheUnionwasthusentitled
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Limits to the Union’s ‘Internal Market’ Competence(s)
touseitsharmonizationpowertopreventthepotentialfragmentationoftheinternal
market.76
(p.228) b)The‘establishment’or‘functioning’oftheInternalMarket
TheUnion’scompetencetoharmonizenationallawsisafunctionalcompetence.Itisnot
thematicallylimited,andappliestoanymeasurethataffectstheestablishmentor
functioningoftheinternalmarket.77TheformeralternativeconcernsobstaclestointraUniontrade;whereasthelatteralternativecapturesdistortionsofcompetitionresulting
fromdisparitiesbetweennationallaws.However,towhatextentwouldUnionlegislation
havetoservethe‘establishment’or‘functioning’oftheinternalmarket?Whateffects
wouldtheUnionlawhavetohaveontheinternalmarket?
Untiltheendofthetwentiethcentury,thejurisprudenceoftheCourthadunequivocally
confirmedthewidestpossiblereadingoftheEuropean‘CommerceClause’.Yet,the
CourtfinallyconfirmedtheexistenceofconstitutionallimitsinGermanyvParliamentand
Council(TobaccoAdvertising).78TheboneofcontentionwasaEuropeanlawthatbanned
theadvertisingandsponsorshipoftobaccoproducts.79Couldaprohibitionorbanbe
basedontheUnion’sCommerceClause?Germanyobjectedtotheidea.Itarguedthat
theUnion’sinternalmarketpowercouldonlybeusedtopromotetheinternalmarket;
andthiswasnotsointheevent,wherethefederallegislationconstituted,inpractice,a
totalprohibitionoftobaccoadvertising.80Further,eveniftotalbanscouldlegitimatelybe
basedonArticle114onthegroundsofremovingdistortionsofcompetition,thissecond
alternativewouldhavetobelimitedtocaseswherethedistortionwas‘considerable’.81
TheCourtaccepted—tothesurpriseofmany—theseinvitationsandannulled,forthefirst
timeinitshistory,aEuropeanlawonthegroundsthatitwentbeyondtheUnion’s
‘CommerceClause’.Emphatically,theCourtpointedoutthatthelattercouldnotgrant
theUnionageneralpowertoregulatetheinternalmarket:
[t]​oconstruethatarticleasmeaningthatitvestsinthe[Union]legislaturea
generalpowertoregulatetheinternalmarketwouldnotonlybecontrarytothe
expresswordingoftheprovisionscitedabovebutwouldalsobeincompatiblewith
theprincipleembodiedinArticle[5TEU]thatthepowersofthe[Union]arelimited
tothosespecificallyconferredonit.Moreover,ameasureadoptedonthebasisof
Article[114]oftheTreatymustgenuinelyhaveasitsobjecttheimprovementof
theconditionsfortheestablishmentandfunctioningoftheinternal(p.229)
market.Ifamerefindingofdisparitiesbetweennationalrulesandoftheabstract
riskofobstaclestotheexerciseoffundamentalfreedomsorofdistortionsof
competitionliabletoresulttherefromweresufficienttojustifythechoiceofArticle
[114]asalegalbasis,judicialreviewofcompliancewiththeproperlegalbasismight
berenderednugatory.82
WhatconsequencesdidtheCourtdrawfromthisstatementofprinciple?TheCourtsplit
itsanalysisintoan‘establishment’and‘functioning’partandanalysed,inturn,thetwo
alternativeapplicationsoftheUnion’sharmonizationpower.
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Limits to the Union’s ‘Internal Market’ Competence(s)
Regardingtheeliminationofobstaclestofreemovement,theCourtqualifieditsgenerous
rulinginSpainvCouncil.Whileacceptingthat‘recoursetoArticle[114]asalegalbasisis
possibleiftheaimistopreventtheemergenceoffutureobstaclestotraderesulting
frommultifariousdevelopmentofnationallaws’,theCourtnonethelessinsistedthat‘the
emergenceofsuchobstaclesmustbelikelyandthemeasureinquestionmustbe
designedtopreventthem’.83Werefutureobstaclestointra-Uniontradeintobacco
advertisinglikely?TheCourtacceptedthisforpressproducts.‘However,fornumerous
typesofadvertisingoftobaccoproducts,theprohibitionunderArticle3(1)ofthe
Directivecannotbejustifiedbytheneedtoeliminateobstaclestothefreemovementof
advertisingmediaorthefreedomtoprovideservicesinthefieldofadvertising’.84Inthe
lightofthis,theEuropeanlegislaturehadnotbeenentitledtorelyonitsinternalmarket
poweronthegroundsthatthemeasurewouldeliminateobstaclestofreemovement.
However,recoursetothecompetencecouldstillhavebeenjustifiedbymeansofthe
secondalternativeinArticle114:theeliminationofdistortionsofcompetition.Here,
though,theCourtacceptedGermany’sinvitationandintroducedasecondinternal
limitation:thedistortionofcompetitionwouldhavetobeappreciable.Intheabsenceof
sucharequirement,thepowersofthe[Union]legislaturewouldbepracticallyunlimited.
Constitutionally,thefederallegislatorcouldthusnotpasslawsunderArticle114‘witha
viewtoeliminatingthesmallestdistortionsofcompetition’.85Andsincethenationallawsat
issuehadonlya‘remoteandindirect’effectoncompetition,disparitiesbetweenthem
couldnotleadtodistortionsthatwereappreciable.86TheDirectivecouldthusneither
havebeenlegitimatelybasedonthesecondprongoftheinternalmarketpowerandthe
CourtconsequentlyannulledtheEuropeanlaw.
WithTobaccoAdvertising,theCourtconsequentlyacceptedsomeeffects-relatedinternal
limitsontheUnion’sinternalmarketpower.First,asimpledisparityinnationallawswill
notbeenoughtotriggertheUnion’sCommerceClause.Thedisparitymustgiveriseto
obstaclesintradeorappreciabledistortionsincompetition.WhileArticle114TFEUcan
beusedto‘harmonize’futuredisparitiesinnationallaws,itmustbe‘likely’thatthe
divergentdevelopmentofnationallawsleadstoobstaclesintrade.(TheCourthas—
strangely—cometoverbalizethisrequirementbyextendingtheconstitutionalcriterionof
a‘directeffect’—textuallymandated(p.230) onlyinArticle115TFEU—toArticle114
TFEU.)87Andsecondly,theUnionmeasuremustactuallycontributetotheeliminationof
obstaclestofreemovementordistortionsofcompetition.88Thesetwoconstitutionallimits
totheUnion’s‘CommerceClause’wereconfirmedinabstractobysubsequent
jurisprudence;yet,theirconcreteapplicationhasledtorenewedaccusationsthatArticle
114grantstheUnionageneralcompetencefortheinternalmarket.89
2.Externallimits:constitutional‘savingclauses’forstate‘policepowers’?
Fromthebeginning,certainprovisionswithintheTreatiescouldbereadasconstitutional
guaranteesfornationalexclusivepowers.ApartfromthemysteriousArticle345TFEU,90
oneoftheprominentcandidateswasArticle36TFEU.Theprovisionallowsstatesto
justifyaviolationofthefreemovementofgoodsongroundsof,interalia,publicmorality,
publicpolicy,andpublicsecurity.Hadthesepolicyfieldsremainedwithintheexclusive
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Limits to the Union’s ‘Internal Market’ Competence(s)
powersofthestates?TheEuropeanCourtgaveshortshrifttothatargumentin
Simmenthal.91 PointingoutthatArticle36TFEUwas‘notdesignedtoreservecertain
matterstotheexclusivejurisdictionofMemberStates’,92theMemberStatescouldnot
insistontheirstricternationallawswhereUnionlegislationprovidedforthenecessary
protectionoftheinterestsinArticle36TFEU.Reactingtothisearlydefeat,theMember
StateshaveincreasinglyusedsubsequentTreatyamendmentstoinsertprovisions
designedtoprotectnationalpowerswithintheTreaty.Themostimportantspeciesof
theseclauses(p.231) excludestheUnionfromharmonizingnationallawswithina
specificpolicyarea.93Forexample:withinits‘publichealth’competenceunderArticle
168TFEU,theUnionisentitledtoadopthealthmeasures‘excludinganyharmonisation
ofthelawsandregulationsoftheMemberStates’.94
Wouldthese‘savingclauses’externallylimittheUnion’sinternalmarketcompetence?The
EuropeanCourthasexpressedanegativeinclinationinGermanyvParliamentand
Council(TobaccoAdvertising).95Whileadmittingthat‘[t]​henationalmeasuresaffected
[were]toalargeextentinspiredbypublichealthpolicyobjectives’,96theUnion
harmonizationmeasurewasnonethelesslegitimate.ForArticle168(5)TFEUdid‘not
meanthatharmonizingmeasuresadoptedonthebasisofotherprovisionsoftheTreaty
cannothaveanyimpactontheprotectionofhumanhealth’.97‘[T]he[Union]legislature
cannotbepreventedfromrelyingonthatlegalbasisonthegroundthatpublichealth
protectionisadecisivefactorinthechoicestobemade.’98Theexpresssavingclause
wouldthusnotoperateasanexternallimitationonArticle114TFEU.WhereUnion
legislationservedaninternalmarketobjective,theUnionlegislatorcouldenterinto
health-relatedfields.However,theCourtconcededthatthesesavingclausesdidhave
someconstitutionalsignificance:theUnionmustnotuseitsinternalmarketpower‘to
circumventtheexpressexclusionofharmonisationlaiddowninArticle[168(5)]ofthe
Treaty’.99
Whiletheselocal‘savingsclauses’doconsequentlynotdirectlylimitArticle114TFEU,
thelatterwillnonethelessfindanabsoluteexternallimitinthe‘constitutionalidentity’of
theEuropeanUnion.100AndsincetheLisbonTreatyintroducedArticle4(2)TEU,the
newprovisionmightpotentiallyevenextendthisexternallimittotheprotectionofthe
constitutionalidentityoftheMemberStates.101
(p.232) III.ComparisonsandConclusions
Thecreationofan‘internalmarket’isaclassictaskofmanyfederations.TheUnitedStates
andtheEuropeanUnionbothenjoyalegislativecompetencetoachievethisaim.Owingto
itsfunctionalscope,thisinternalmarketcompetencehasbeensubjecttointense
constitutionaldebatesonbothsidesoftheAtlantic.For,whiletheremust—intheory—be
constitutionallimitationstoitsscope,theextenttowhichthetwofederationshave
exercisedtheircompetencehasalmostcontinuouslyexpandedinconstitutionalpractice.
ThisexpandingfederaluniversecanbestbetracedinthehistoryoftheUnitedStates’
‘CommerceClause’.Theextenttowhicheconomic‘unitywithindiversity’couldbe
createdhashere,however,changedovertime.Priortothe‘NewDeal’,theUnion’s
‘CommerceClause’wasinternallyandexternallylimitedbysolidconstitutional
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Limits to the Union’s ‘Internal Market’ Competence(s)
safeguards.Internally,theClause’sreferencetothe‘regulat[ion]’ofcommercewas
takentoexcludegeneral‘prohibitions’ofcommerce.Further,accordingtothe—then
dominant—philosophyofdualfederalism,particularpolicyareaswerecompletelyoutside
thescopeofthe‘CommerceClause’.Bothconstitutionallimitationsweretowitherawayin
theaftermathoftheNewDeal,inthecourseofwhichtheSupremeCourtleftthefederal
balancetothepoliticalsafeguardsoffederalism.However,shouldthefederallegislator
beentitledtoautonomouslydeterminethescopeofthe‘CommerceClause’withoutany
constitutionallimitations?ThisviewwasultimatelyrejectedinGarcia,wheretheCourt
revivedtheideaofjudicialsafeguardsoffederalism.Whatconstitutionalboundaries
wouldlimitthe‘CommerceClause’?WesawearlierthattheCourtinsistsuponthree
principallimitations.First,federallegislationmustregulate(orprohibit102)aneconomic
activitythatwould‘substantiallyaffect’interstatecommerce.103Secondly,whilefederal
legislationcan‘regulate’,itcannot‘create’federalcommerce.104Thirdly,thereisan
externallimittothe‘CommerceClause’intheformofthenon-commandeeringrule.105
Federalcommercelegislationcannotrequirestatelegislaturestoadopt‘harmonized’
statelaws.
WhatabouttheEuropeanUnion’sinternalmarketcompetence?Textually,thelatter
seemed—atleastinonerespect—morelimitedthanitsAmericancounterpart.Forthe
Union’spowertoestablishitscommonmarketappearedtohingeonthe‘harmonization’
ofexistingnationallaws.YettheEuropeanCourtofJusticemanagedtogradually
transformthis‘harmonization’powerintoa‘regulatory’powerthatwas—almost—
completelyindependentoftheexistenceofnationallegislation.Thisliberationwas
achievedbymeansofthedoctrineof‘preventive’harmonization,aswellasthejudicial
acceptanceofan(almost)unlimitedUniondiscretionwithregardtoits‘harmonization’
techniques.Thesoleconstitutional(p.233) limitthattheCourtstillappears—atleast
rhetorically—toconfirmistheinabilityof‘harmonizationmeasures’tocreate‘new
rights’.106Whataboutthereferencetothe‘establishment’or‘functioning’oftheinternal
market?ThatafederallawadoptedunderArticle114TFEUcouldnotjust‘regulate’but
alsogenerally‘prohibit’wasconfirmedinTobaccoAdvertising.107However,theCourt
hereclarifiedthatthosecommercialprohibitions,ifnotlikelytoremoveobstaclesto
trade,must‘appreciably’servethefunctioningoftheinternalmarket.Thefederal
legislatorcouldthusnotpasslaws‘withaviewtoeliminatingthesmallestdistortionsof
competition’.Theoppositeviewwouldbeincompatiblewiththeprincipleofconferred
powersonwhichtheUnion’sfederalstructurewasbased.108
Inconclusion:theinternalmarketcompetencesofbothfederalunionsarehorizontal
competencesthatmainlyconcentrateontheeffectsoffederallegislation.Theeffectsbasedtesthasmeantthattherearenoapriorithematicexclusionsfromthescopeofthe
Unioncompetences.(ThesoleexternallimitationacceptedinUSjurisprudenceisofa
formalnature:thestatescannotbe‘commandeered’intoharmonizingnationallaw.)Inthe
absenceofanytangibleinternalorexternalthematiclimitationsonbothcompetences,the
only‘real’limitshavebeenthepoliticalsafeguardsoffederalism.Thesesafeguards
appearmuchstrongerintheEuropeanUnion.Forunlikethesimplestatemajorityinthe
USSenate,aqualifiedmajorityofstatescontinuestoberequiredtobackUnion
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Limits to the Union’s ‘Internal Market’ Competence(s)
legislation.Thishigherpoliticalhurdlewill(partly)diminish,however,oncethe(new)
Lisbonvotingsystemcomesintooperation.109TheEuropeanUnionwillthus—evenin
thisrespect—followinthefootstepsoftheAmerican‘CommerceClause’.
Notes:
(1 )FortheUSConstitution,seeartI,s1(emphasisadded):‘[a]lllegislativePowers
hereingrantedshallbevestedinaCongressoftheUnitedStates,whichshallconsistofa
SenateandHouseofRepresentatives’;aswellastheTenthAmendment:‘[t]hepowers
notdelegatedtotheUnitedStatesbytheConstitution,norprohibitedbyittotheStates,
arereservedtotheStatesrespectively,ortothepeople.’FortheEUthisfollowsfrom
the‘principleofconferral’asexpressedinart5(2)TEU:‘[u]ndertheprincipleof
conferral,theUnionshallactonlywithinthelimitsofthecompetencesconferreduponit
bytheMemberStatesintheTreatiestoattaintheobjectivessetouttherein.
CompetencesnotconferredupontheUnionintheTreatiesremainwiththeMember
States.’
(2)A.Hamilton,‘FederalistNo.11’,inA.Hamilton,J.Madison,andJ.Jay,TheFederalist
(CambridgeandNewYork:CambridgeUniversityPress,2003),46,at51.
(3)OntheimpactofAdamSmithontheAmericanFounders,seeS.Fleishacker,‘Adam
Smith’sreceptionamongtheAmericanfounders,1776–1790’(2002)59William&Mary
Quarterly897.
(4)ComitéIntergouvernementalCréeparlaConferencedeMessine,RapportdesChefs
DeDelegation(‘SpaakReport’),astranslatedbyJ.J.A.Ellis,‘SourceMaterialforArticle
85(1)oftheEECTreaty’(1963)32FordhamLawReview247,at249.
(5)Cf.A.Hamilton,‘FederalistNo.22’,inHamiltonandothers(n2)98:‘[t]hewantofa
powertoregulatecommerceisbyallpartiesallowedtobeofthenumber.Theutilityof
suchapowerhasbeenanticipatedunderthefirstheadofourinquiries;andforthis
reason,aswellasfromtheuniversalconvictionentertaineduponthesubject,littleneed
beaddedinthisplace.Itisindeedevident,onthemostsuperficialview,thatthereisno
object,eitherasitrespectstheinterestsoftradeorfinance,thatmorestronglydemands
afederalsuperintendence.’
(6)USConstitution,artI,s8(Clause3).
(7)Onthe(deregulatory)‘dormant’partofthe‘CommerceClause’,seeJ.N.Eule,‘Laying
theDormantCommerceClausetoRest’(1982)91YaleLawJournal425;aswellasM.
Tushnet,‘RethinkingtheDormantCommerceClause’(1979)WisconsinLawReview125.
(8)UnderArticlesofConfederation,therehadbeenno‘CommerceClause’.
(9)USConstitution,artI,s8(cl3).
(10)Theprovisionisoftensupportedbythe‘NecessaryandProperClause’.Thisisthe
lastclauseinartI,s8,andprovidesCongresswiththepower‘[t]omakeallLawswhich
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Limits to the Union’s ‘Internal Market’ Competence(s)
shallbenecessaryandproperforcarryingintoExecutiontheforegoingPowers,andall
otherPowersvestedbythisConstitutionintheGovernmentoftheUnitedStates’.In
Americanconstitutionalpractice,theclausecanonlybeusedincombinationwithoneof
the‘foregoingpowers’.The‘sweepingclause’isthus‘notaself-containedpower’asit
‘mustalwaysbetiedtotheexerciseofsomeotheridentifiableconstitutionalpowerofthe
nationalgovernment’(G.LawsonandP.B.Granger,‘The“Proper”ScopeofFederal
Power:AJurisdictionalInterpretationoftheSweepingClause’(1993-94)43DukeLaw
Journal267,at274–5).The‘NecessaryandProperClause’thusrequiresthepresence
ofanexpresslyenumeratedpowerintheConstitution.Inthissense:R.Beck,‘TheNew
JurisprudenceoftheNecessaryandProperClause’(2002)UniversityofIllinoisLaw
Review581,at592:‘[t]heclausemerelyconfirmedtheexistenceoflesserpowers,not
expresslydetailedintheConstitution,whichwouldserveasthemeansofcarryingthe
enumeratedpowersintoeffect.’The‘NecessaryandProperClause’maythenbestbe
identifiedwitharuleofinterpretationforthescopeofanexpresspower.Itallowsthe—
very—wideexerciseofa‘pre-existing’power,seeMcCullochvMaryland17US316
[1819],421:‘[l]ettheendbelegitimate,letitbewithinthescopeoftheconstitution,and
allmeanswhichareappropriate,whichareplainlyadaptedtothatend,whicharenot
prohibited,butconsistentwiththeletterandspiritoftheconstitution,areconstitutional.’
(11 )GibbonsvOgden22US1[1824].
(12)HammervDagenhart247US251[1918].
(13)HammervDagenhart(n12)270,emphasisadded.
(14)HammervDagenhart(n12).
(15)SeeChampionvAmes(LotteryCases)188US321[1903]:‘[t]heauthoritygivento
Congresswasnottoprohibit,butonlytoregulate.’
(16)HammervDagenhart(n12)273.
(17)USTermLimitsIncvThornton514US779[1995],838(JusticeKennedy,
concurring).
(18)ChisholmvStateofGeorgia2US419[1793],435.
(19)AblemanvBooth62US506[1859],516.
(20)W.F.Dodd,‘ImpliedPowersandImpliedLimitationsinConstitutionalLaw’(1919)29
YaleLawJournal137.
(21 )UnitedStatesvKnight156US1[1895].
(22)UnitedStatesvKnight(n21)11and13.
(23)UnitedStatesvKnight(n21)12.Thewell-knownpassagefromKiddvPearson128
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Limits to the Union’s ‘Internal Market’ Competence(s)
US1[1888],20–22reads:‘[n]odistinctionismorepopulartothecommonmind,ormore
clearlyexpressedineconomicandpoliticalliterature,thanthatbetweenmanufactures
andcommerce.Manufactureistransformation—thefashioningofrawmaterialsintoa
changeofformforuse.Thefunctionsofcommercearedifferent.Thebuyingandselling
andthetransportationincidentaltheretoconstitutecommerce;andtheregulationof
commerceintheconstitutionalsenseembracestheregulationatleastofsuch
transportation....Ifitbeheldthattheterm[commerce]includestheregulationofallsuch
manufacturesasareintendedtobethesubjectofcommercialtransactionsinthefuture,
itisimpossibletodenythatitwouldalsoincludeallproductiveindustriesthat
contemplatethesamething.TheresultwouldbethatCongresswouldbeinvested,tothe
exclusionofthestates,withthepowertoregulate,notonlymanufacture,butalso
agriculture,horticulture,stock-raising,domesticfisheries,mining,—inshort,every
branchofhumanindustry.Foristhereoneofthemthatdoesnotcontemplate,moreor
lessclearly,aninterstateorforeignmarket?’
(24)T.R.Powell,‘SomeAspectsofConstitutionalismandFederalism’(1935-36)14North
CarolinaLawReview1,at26.
(25)Forabriefsummary,seeR.L.Stern,‘TheCommerceClauseandtheNational
Economy,1933–1946’(1945-46)59HarvardLawReview645,at653.
(26)TheSupremeCourtdealtwiththe‘AgriculturalAdjustmentAct’inUnitedStatesv
Butleretal297US1[1936];andthe‘NationalIndustrialRecoveryAct’inSchechter
PoultryCorpvUnitedStates295US495[1935].
(27)NationalLaborRelationsBoardvJones&LaughlinSteelCorp301US1[1937].
(28)NationalLaborRelationsBoardvJones&LaughlinSteelCorp(n27)29,emphasis
added.
(29)NationalLaborRelationsBoardvJones&LaughlinSteelCorp(n27)36–37,
emphasisadded.
(30)WickardvFilburn317US111[1942],127–128:‘[t]hemaintenancebygovernment
regulationofapriceforwheatundoubtedlycanbeaccomplishedaseffectivelyby
sustainingorincreasingthedemandasbylimitingthesupply.Theeffectofthestatute
beforeusistorestricttheamountwhichmaybeproducedforthemarketandtheextent
aswelltowhichonemayforestallresorttothemarketbyproducingtomeethisown
needs.Thatappellee’sowncontributiontothedemandforwheatmaybetrivialbyitselfis
notenoughtoremovehimfromthescopeoffederalregulationwhere,ashere,his
contribution,takentogetherwiththatofmanyotherssimilarlysituated,isfarfromtrivial.’
(31 )Cf.UnitedStatesvDarby312US100[1941],124:‘[t]heamendmentstate[d]buta
truismthatallisretainedwhichhasnotbeensurrendered’.Insteadofconstitutingan
independentlimitonthe‘CommerceClause’,theTenthAmendmentmustbe‘construed
asnotdeprivingthenationalgovernmentofauthoritytoresorttoallmeansforthe
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Limits to the Union’s ‘Internal Market’ Competence(s)
exerciseofagrantedpowerwhichareappropriateandplainlyadaptedtothepermitted
end’.InNationalLeagueofCitiesvUsery426US833[1976],theSupremeCourthad
stillfoundthe‘truism’tobeofsomesignificance.This‘exception’totheinoperabilityof
theTenthAmendmentasanexternallimitonthe‘CommerceClause’wasexplicitly
overruledinGarciavSanAntonioMetropolitanTransitAuthority469US528[1985],
wheretheSupremeCourtheld:‘[w]ethereforenowreject,asunsoundinprincipleand
unworkableinpractice,aruleofstateimmunityfromfederalregulationthatturnsona
judicialappraisalofwhetheraparticulargovernmentalfunctionis“integral”or
“traditional”....Wedoubtthatcourtsultimatelycanidentifyprincipledconstitutional
limitationsonthescopeofCongress’CommerceClausepowersovertheStatesmerely
byrelyingonaprioridefinitionsofstatesovereignty’(GarciavSanAntonioMetropolitan
TransitAuthority446–548).
(32)Onthetheoryofthepoliticalsafeguardsoffederalism,seeH.Wechsler,‘ThePolitical
SafeguardsofFederalism:TheRoleoftheStatesintheCompositionandSelectionofthe
NationalGovernment’(1954)54ColumbiaLawReview543.
(33)GarciavSanAntonioMetropolitanTransitAuthority(n31)550–551and556,
emphasisadded.
(34)L.Tribe,AmericanConstitutionalLaw,Vol.1(NewYork:FoundationPress,2000),
865–6:‘[t]hepoliticalsafeguardsoffederalismcannotalwaysbecountedontoprevent
state-subordinatingexcessesoffederallegislativepower.ThefactthatCongressismade
upof(andrepresents)individualsobviouslydoesnotguaranteethatthatbody...will
alwaysactinaccordancewithindividualrights;sotoothefactthatCongressismadeup
of(andreflects)theelectedrepresentativesofstatesdoesnotassurethatthenation’s
legislaturewillalwaysadequaterespecttotherightsofstates.’
(35)UnitedStatesvLopez514US549[1995].
(36)UnitedStatesvLopez(n35)557.
(37)UnitedStatesvLopez(n35)558−559,referencesomitted.
(38)UnitedStatesvLopez(n35)560.
(39)NationalFederationofIndependentBusinessvSebelius567US[2012].An
electroniccopyofthejudgmentisavailableat:
<http://supreme.justia.com/cases/federal/us/567/11-393>.
(40)NationalFederationofIndependentBusinessvSebelius(n39)17.
(41 )NationalFederationofIndependentBusinessvSebelius(n39)18:‘[b]utCongress
hasneverattemptedtorelyonthatpowertocompelindividualsnotengagedin
commercetopurchaseanunwantedproduct.Legislativenoveltyisnotnecessarilyfatal;
thereisafirsttimeforeverything.Butsometimes“themosttellingindicationof[a]
severeconstitutionalproblem...isthelackofhistoricalprecedent”forCongress’saction.’
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Limits to the Union’s ‘Internal Market’ Competence(s)
(42)NationalFederationofIndependentBusinessvSebelius(n39)20and26,emphasis
added.
(43)M.D.AdlerandS.F.Kreimer,‘TheNewEtiquetteofFederalism:NewYork,Printz,
andYeskey’(1998)SupremeCourtReview71.
(44)InNewYorkvUnitedStates505US144(1992),petitionershadnotcontendedthat
theTenthAmendmentlimitedthepowerofCongresstoactinrelationtothesubject
matteratissue(andtheCourtwouldaffirmthatCongresshadpowerovertheissue).
TheyhadonlycontendedthatthemannerinwhichCongresshadexerciseditspower
wasunconstitutional.Thequestionwas,whether‘Congressmayusethestatesas
implementsofregulation;thatis,whetherCongressmaydirectorotherwisemotivatethe
statestoregulateinaparticularfieldoraparticularway’.
(45)NewYorkvUnitedStates(n44)166.
(46)NewYorkvUnitedStates(n44)188(withreferencetotheFederalistNo.39).
AccordingtoE.H.Caminker,‘StateSovereigntyandSubordinancy:MayCongress
CommandeerStateOfficerstoimplementFederalLaw?’(1995)95ColumbiaLawReview
1001,thisformalunderstandingofthestatesasinstitutionallyautonomousentitiesis
‘quitenew’:‘[u]ntilquiterecently,theSupremeCourtattemptedtosecureitsviewofthe
properallocationofpowerbetweenthetwogovernmentalsystemsthrougheffortsto
circumscribethesubstantivecontentofenumeratedfederalpower.’
(47)Art3(a)–(c)oftheoriginalEECTreaty.Initssubsequenttitles,theTreatywouldlay
downspecificprovisionsonthefreemovementofgoods,persons,services,andcapital.
Themostwell-knownofthese‘dormantCommerceClauses’isart34TFEU.The
provisionreads:‘[q]uantitativerestrictionsonimportsandallmeasureshavingequivalent
effectshallbeprohibitedbetweenMemberStates.’
(48)Art3(h)oftheEECTreaty.
(49)TheUnion’sharmonizationcompetenceswerescatteredacrosstheTreaty.Examples
atthetimeoftheadoptionoftheEECTreatywere:ex-art27fortheharmonizationof
customslegislation;ex-Art54(3)(g)inthefieldofcompanylaw;ex-art56(2)intheareaof
justifiedrestrictionsonthefreedomofestablishmentandfreeprovisionofservices;exart57(2)and(3)concerningaccessandexerciseofprofessionalactivities;ex-art70gave
aspecificharmonizationcompetenceasregardsfreemovementofcapital;ex-art99was
confinedtoindirecttaxation;andex-art117wastopermittheharmonizationofsocial
systems.
(50)P.Leleux,‘Lerapprochementdeslégislationsdanslacommunautéeconomique
européenne’(1968)4CahiersDeDroitEuropéen129,at138.
(51 )Onthe‘transformation’ofthedirectiveintoadirectlyeffectiveand(potentially)fieldpre-emptiveinstrument,seeR.Schütze,EuropeanConstitutionalLaw(Cambridgeand
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Limits to the Union’s ‘Internal Market’ Competence(s)
NewYork:CambridgeUniversityPress,2012),323etseq,aswellas371etseq.Onthe
widenotionof‘approximation’,seesectionII.1.a.
(52)Onthefunctionandscopeofart115TFEUintheUnionlegalorder,seeF.Marx,
FunktionundGrenzenderRechtsangleichungnachArt.100EWG-Vertrag(Cologne,
Berlin,Bonn,andMunich:Heymanns,1976);andC.Eiden,DieRechtsangleichung
gemäßArt.100desEWG-Vertrages(Berlin:Duncker&Humblot,1984).
(53)Onthispoint,seeA.Dashwood,‘HasteningSlowly:TheCommunity’sPathTowards
Harmonization’,inH.Wallace,W.Wallace,andC.Webb(eds.),Policy-Makinginthe
EuropeanCommunity(LondonandNewYork:Wiley&SonsLtd,1983),177.
(54)D.Vignes,‘TheHarmonisationofNationalLegislationandtheEEC’(1990)15
EuropeanLawReview358,at367.
(55)Constitutionally,art114TFEUnolongercontainedthe—bynowobsolete—
referencesto‘directives’asinstrumentsofharmonization;nordiditmentionthe‘direct
[e]ffect’ofnationallawsontheinternalmarket.
(56)ThisreinforcementoftheUnion’sharmonizationpowerwould,however,be
thematicallylimited,sincethenewcompetencecould‘notapplytofiscalprovisions,to
thoserelatingtothefreemovementofpersonsnortothoserelatingtotherightsand
interestsofemployedpersons’(art114(2)TFEU).Obstaclestotradeordistortionsof
competitionarisingfromregulatorybarrierswithintheseareaswouldthusstillhaveto
beeliminatedbyrecoursetoart115,oroneofthespeciallegalbasesprovidedforinthe
Treaty(e.g.art113fortheharmonizationofindirecttaxation).
(57)Inthissense:J.Usher,‘HarmonisationofLegislation’,inD.Lasokandothers(eds.),
LesCommunautésEuropéennesenFonctionnement(Brussels:Bruylant,1981),171,at
174,arguingthattheconceptof‘approximation’‘wouldappearnecessarilytoimplythat
thematterinquestionisgovernedbynationalrulesinthefirstplace,andremains
governedbynationalrulesaftertheyhavebeenharmonized’.
(58)Accordingtoart288(3)TFEU,‘[a]directiveshallbebinding,astotheresulttobe
achieved,uponeachMemberStatetowhichitisaddressed,butshallleavetothe
nationalauthoritiesthechoiceofformandmethods’.
(59)OntheUnioninstrumentof‘regulation’,seeSchütze(n51)317etseq.
(60)CaseC-359/92GermanyvCouncil[1994]ECRI-3681.
(61 )Germany’sprincipalclaiminthisrespectisquotedinpara17:‘[t]heGerman
Governmentobjectstothatargumentessentiallyonthegroundthatthesoleaimof
Article[114]etseq.ofthe[FEU]Treaty,andofArticle[114(1)]inparticular,isthe
approximationoflawsandthatthosearticlesdonotthereforeconferpowertoapplythe
lawtoindividualcasesintheplaceofthenationalauthorities,aspermittedbyArticle9of
thedirective.’
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Limits to the Union’s ‘Internal Market’ Competence(s)
(62)Directive92/59/EECongeneralproductsafety,[1992]OJL228/24,whichisnow
replacedbyDirective2001/95/ECongeneralproductsafety,[2002]OJL11/4.Art9
providedasfollows:‘[i]ftheCommissionbecomesaware,throughnotificationgivenby
theMemberStatesorthroughinformationprovidedbythem,inparticularunderArticle
7orArticle8,oftheexistenceofaseriousandimmediateriskfromaproducttothe
healthandsafetyofconsumersinvariousMemberStatesandif:(a)oneormore
MemberStateshaveadoptedmeasuresentailingrestrictionsonthemarketingofthe
productorrequiringitswithdrawalfromthemarket,suchasthoseprovidedforin
Article6(1)(d)to(h);(b)MemberStatesdifferontheadoptionofmeasurestodealwith
theriskinquestion;(c)theriskcannotbedealtwith,inviewofthenatureofthesafety
issueposedbytheproductandinamannercompatiblewiththeurgencyofthecase,
undertheotherprocedureslaiddownbythespecific[Union]legislationapplicabletothe
productorcategoryofproductsconcerned;and(d)theriskcanbeeliminatedeffectively
onlybyadoptingappropriatemeasuresapplicableat[Union]level,inordertoensurethe
protectionofthehealthandsafetyofconsumersandtheproperfunctioningofthe
commonmarket,theCommission,afterconsultingtheMemberStatesandattherequest
ofatleastoneofthem,mayadoptadecision,inaccordancewiththeprocedurelaiddown
inArticle11,requiringMemberStatestotaketemporarymeasuresfromamongthose
listedinArticle6(1)(d)to(h).’
(63)GermanyvCouncil(n60)paras37−38,emphasisadded.
(64)ForarecentandcriticalanalysisofthisquestioninthecontextoftheEuropean
BankingAuthority,seeE.Fahey,‘DoestheEmperorhaveFinancialCloth?Reflectionson
theLegalBasisoftheEuropeanBankingAuthority’(2011)74ModernLawReview581.
(65)Case66/04UnitedKingdomvParliamentandCouncil[2005]ECRI-10553.In
relationtotheuseofart114TFEUtocreateaUnionbody,seeCaseC-217/04United
KingdomvParliamentandCouncil(ENISA)[2006]ECRI-3771,esppara44:‘[t]he
legislaturemaydeemitnecessarytoprovidefortheestablishmentofa[Union]body
responsibleforcontributingtotheimplementationofaprocessofharmonisationin
situationswhere,inordertofacilitatetheuniformimplementationandapplicationofacts
basedonthatprovision,theadoptionofnon-bindingsupportingandframework
measuresseemsappropriate.’
(66)Art9(1)(b)oftheRegulation;andseealso:art11(1)oftheRegulation.
(67)UnitedKingdomvParliamentandCouncil(n65)para18,emphasisadded.
(68)UnitedKingdomvParliamentandCouncil(n65)para64.
(69)UnitedKingdomvParliamentandCouncil(n65)para45.Thiswasconfirmedin:Case
C-217/04UnitedKingdomvParliamentandCouncil(2006)ECRI-3771para43.
(70)Foranearlyversionofthisargument,seeT.Vogelaar,‘TheApproximationofthe
LawsoftheMemberStatesundertheTreatyofRome’(1975)12CommonMarketLaw
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Limits to the Union’s ‘Internal Market’ Competence(s)
Review211,at213.TheUnionstandardwillnonethelessbesubjecttotheprincipleof
proportionality(cf.art5(4)TEU).OnesubstantiveorientationfortheUnionharmonization
standardcanbefoundinart114(3)TFEU,whichreads:‘[t]heCommission,inits
proposalsenvisagedinparagraph1concerninghealth,safety,environmentalprotection
andconsumerprotection,willtakeasabaseahighlevelofprotection,takingaccountin
particularofanynewdevelopmentbasedonscientificfacts.Withintheirrespective
powers,theEuropeanParliamentandtheCouncilwillalsoseektoachievethisobjective.’
(71 )CaseC-350/92SpainvCouncil[1995]ECRI-1985.ButseenowalsoCaseC-58/08
VodafoneandothersvSecretaryofStateforBusiness,EnterpriseandRegulatory
Reform(2010)ECRI-4999.
(72)Reg1768/92concerningthecreationofasupplementaryprotectioncertificatefor
medicinalproducts[1992]OJL182/1.
(73)LegislationforthecreationofnewrightswillhavetobebasedonArt352TFEU,cf.
SpainvCouncil(n71)para23(withreferencetoOpinion1/94onthecompetenceofthe
Communitytoconcludeinternationalagreementsconcerningservicesandtheprotection
ofintellectualproperty,[1994]ECRI-5267para59).
(74)SpainvCouncil(n71)para27.
(75)SpainvCouncil(n71)para35(withreferencetothesixthrecitalofRegulation
1768/92).
(76)Ontheideaof‘preventive’harmonizationintheinternalmarket,seeM.Seidel,
‘PräventiveRechtsangleichungimBereichdesGemeinsamenMarktes’(2006)41
Europarecht26.Forsomelimits,seehowever:CaseC-436/03ParliamentandCouncil
[2006]ECRI-3733para44,emphasisadded.TheCourthereconfirmedandextended
thepointmadeinrelationtointellectualpropertylaw(cf.SpainvCouncil(n71);aswellas
CaseC-377/98NetherlandsvCouncilandParliament[2001]ECRI-7079)to‘newlegal
formsinadditiontothenationalformsofcooperativesocieties’(para40).
(77)Cf.S.Weatherill,‘TheLimitsofLegislativeHarmonizationTenYearsafterTobacco
Advertising:HowtheCourt’sCaseLawhasbecomea“DraftingGuide”’(2011)12
GermanLawJournal827,at831:‘[a]rticle[114]isfunctionallydriven:anynational
measuremaybeharmonizedprovidedthatleadstoanimprovementinthefunctioningof
theinternalmarketenvisagedbyArticle26TFEU[.]’
(78)CaseC-376/98GermanyvParliamentandCouncil(TobaccoAdvertising)[2000]ECR
I-8419.
(79)Directive98/43/EContheapproximationofthelaws,regulationsandadministrative
provisionsoftheMemberStatesrelatingtotheadvertisingandsponsorshipoftobacco
products[1998]OJL213/9.
(80)Germanyhadpointedoutthatthesoleformofadvertisingallowedunderthe
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Limits to the Union’s ‘Internal Market’ Competence(s)
Directivewasadvertisingatthepointofsale,whichonlyaccountedfor2percentofthe
tobaccoindustry’sadvertisingexpenditure(TobaccoAdvertising(n78)para24).
(81 )TobaccoAdvertising(n78)para29.Therewascaselawtosupportthisclaim,e.g.
Case91/79CommissionvItaly[1980]ECR1099para8;aswellasCaseC-300/89
CommissionvCouncil(TitaniumDioxide)[1991]ECRI-2867para23.
(82)TobaccoAdvertising(n78)paras83–84.
(83)TobaccoAdvertising(n78)para86,emphasisadded.
(84)TobaccoAdvertising(n78)paras97and99.
(85)TobaccoAdvertising(n78)paras106–107.
(86)TobaccoAdvertising(n78)para109.
(87)Cf.CaseC-210/03SwedishMatch[2004]ECRI-11893para29;aswellasCase
380/03GermanyvParliamentandCouncil(TobaccoAdvertisingII)[2006]ECRI-11573
para37.Seealso:CaseC-58/08R,ontheapplicationofVodafoneLtdandOthersv
SecretaryofStateforBusiness,EnterpriseandRegulatoryReform(2010)ECRI-4999
para32(emphasisadded):‘[w]hileamerefindingofdisparitiesbetweennationalrules
andtheabstractriskofinfringementsoffundamentalfreedomsordistortionof
competitionisnotsufficienttojustifythechoiceofArticle[114TFEU]asalegalbasis,the
[Union]legislaturemayhaverecoursetoitinparticularwheretherearedifferences
betweennationalruleswhicharesuchastoobstructthefundamentalfreedomsandthus
haveadirecteffectonthefunctioningoftheinternalmarket.’
(88)CaseC-491/01BritishAmericanTobacco[2002]ECRI-11453para60.
(89)ThishasledD.Wyatt,‘CommunityCompetencetoRegulatetheInternalMarket’,
OxfordFacultyofLawResearchPaper9/2007,23toquerywhetherTobaccoAdvertising
wasa‘falsedawn’.ForananalysisoflegislativeandjudicialpracticeafterTobacco
Advertising,seealsotheexcellentanalysisbyWeatherill(n77).
(90)Theprovisionreads:‘[t]hisTreatiesshallinnowayprejudicetherulesinMember
Statesgoverningthesystemofpropertyownership.’
(91 )Case35/76SimmenthalvItalianMinisterofFinance[1976]ECR1871.
(92)SimmenthalvItalianMinisterofFinance(n91)para14.However,forajudicial‘slip
ofthetongue’,seeCase265/95CommissionvFrance[1997]ECRI-6959paras32–33:
‘[a]rticle[34TFEU]thereforerequirestheMemberStatesnotmerelythemselvesto
abstainfromadoptingmeasuresorengaginginconductliabletoconstituteanobstacleto
tradebutalso,whenreadwithArticle[4(3)TEU]oftheTreaty,totakeallnecessaryand
appropriatemeasurestoensurethatthatfundamentalfreedomisrespectedontheir
territory.Inthelattercontext,theMemberStates,whichretainexclusivecompetenceas
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Limits to the Union’s ‘Internal Market’ Competence(s)
regardsthemaintenanceofpublicorderandthesafeguardingofinternalsecurity,
unquestionablyenjoyamarginofdiscretionindeterminingwhatmeasuresaremost
appropriatetoeliminatebarrierstotheimportationofproductsinagivensituation.’
(93)Foranoverviewofthevarioustypesofconstitutional‘savingclauses’intheUnion
legalorder,seeRSchütze,‘TheEuropeanCommunity’sFederalOrderofCompetences:
ARetrospectiveAnalysis’,inM.DouganandS.Currie(eds.),FiftyYearsoftheEuropean
Treaties—LookingbackandThinkingForward(OxfordandPortland,Or.:Hart,2009),
63,at87–90.
(94)Art168(5)TFEU,emphasisadded.
(95)GermanyvCouncil(TobaccoAdvertising)(n78).
(96)GermanyvCouncil(TobaccoAdvertising)(n78)para76,emphasisadded.
(97)GermanyvCouncil(TobaccoAdvertising)(n78)para78.
(98)GermanyvCouncil(TobaccoAdvertising)(n78)para88.
(99)GermanyvCouncil(TobaccoAdvertising)(n78)para79.
(100)Forthisargument,albeitinthecontextofart352TFEU,seeOpinion2/94,
AccessionbytheEuropeanCommunitytotheECHR[1996]ECRI-1759.
(101 )Art4(2)TEUstates:‘[t]heUnionshallrespecttheequalityofMemberStates
beforetheTreatiesaswellastheirnationalidentities,inherentintheirfundamental
structures,politicalandconstitutional,inclusiveofregionalandlocalself-government.It
shallrespecttheiressentialStatefunctions,includingensuringtheterritorialintegrityof
theState,maintaininglawandorderandsafeguardingnationalsecurity.Inparticular,
nationalsecurityremainsthesoleresponsibilityofeachMemberState.’Themeaningof
art4(2)TEUremainshighlycontroversial.Foranexcellentoverviewoftheprovision—
anditspotentialasafutureconstitutionaltool—seeB.Guastaferro,‘Beyondthe
ExceptionalismofConstitutionalConflicts:TheOrdinaryFunctionsoftheIdentityClause’
(2012)31YearbookofEuropeanLaw263.
(102)Cf.UnitedStatesvLopez(n35);aswellas:GonzalesvRaich545US1[2005].
(103)Cf.UnitedStatesvLopez(n35)560.
(104)Cf.NationalFederationofIndependentBusinessvSebelius(n39).
(105)Cf.NewYorkvUnitedStates(n44).
(106)Cf.CaseC-350/92SpainvCouncil[1995]ECRI-1985.
(107)GermanyvParliamentandCouncil(TobaccoAdvertising)(n78).
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Limits to the Union’s ‘Internal Market’ Competence(s)
(108)GermanyvParliamentandCouncil(TobaccoAdvertising)(n78)paras106–107.
(109)From1November2014acompletelynewsystemofvotingistoapplyinthe
Council.Thisrevolutionarychangeissetoutinart16(4)TEU:‘[a]sfrom1November
2014,aqualifiedmajorityshallbedefinedasatleast55percentofthemembersofthe
Council,comprisingatleast15ofthemandrepresentingMemberStatescomprisingat
least65percentofthepopulationoftheUnion.Ablockingminoritymustincludeatleast
fourCouncilmembers,failingwhichthequalifiedmajorityshallbedeemedattained.The
otherarrangementsgoverningthequalifiedmajorityarelaiddowninArticle238(2)ofthe
TreatyontheFunctioningoftheEuropeanUnion.’
Accessbroughttoyouby: EuropeanUniversityInstitute
Library
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