Analysis of European Union Business Law Case - Essay Example

European Union Business Law Assignment Question The case examines the issue of Stewie, a UK national who has been offered a job in France and hence, will want to move there with his same-sex civil partner, Rupert and Lois his mother. The issues relating to the case include the rights to move into France. Rules The central European Union law that governs this case is Article 45 of the Treaty on the Functioning of the European (TFEU). The Article grants freedom of movement to all workers of the European Union1. There is also the abolishing of any discrimination against workers from Member States who work in another Member State of the European Union2. This forms the centrality of the European Union’s rules on the free movement of persons. However, looking at the nature of the creation of the European Union, the laws on the free movement of persons were thought of to be applicable to only persons who moved to other member states to do economic activities like working3. However, in the landmark case of Van Duyn V Home Office4 it was identified that Article 45 of the TFEU had a vertical direct effect and hence, it could be enforced by any citizen of the European Union. It also applies to all legal relationships by members of the European Union5. In the application of sub-section 2 of TFEU Article 45, a “worker” is a person who performs services of an economic value for and under the direction of another in return for remuneration6. Thus, there is a protection under this provision implies that a worker is protected from all kinds of discrimination that might exist in relation to his stay and continuous provision of services that he provides in another Member State. Unemployed citizens of a Member State can enter another Member State in search of a job under Article 45(3). And to this end, a person could be in another Member State for a reasonable period of time in The State V Royer7 was defined to be a period of up to six months. Family members of a worker in another Member State are also empowered by Article 2(2)(c) of Directive 2004/38 to live with their dependent children under the age of 21 and their dependent spouses who are not working. Article 10 of Regulation 492/2001 provides equal rights to these dependents connected to a person. Article 2 of Regulation 1612/68 which was replaced by Directive 2004/38 guarantees the rights of spouses, registered partners, descendants and ascendants of EU nationals working in another Member State that is not their primary home8. However, they must show that these individuals or persons are their dependents9. Case Analysis From the case at hand, Stewie qualifies as a worker and hence, he has the right to move to France without any kinds of restrictions from any public authorities under Article 45 of the TFEU. All he need is a valid passport to cross over into France and if any kind of unreasonable or unacceptable restriction is placed in his way, he can sue the public authorities. Rupert is protected by Directive 2004/38 which recognises spouses and registered partners. Being in a civil partnership with Stewie, he is qualified to move with Stewie into France and live with him as a dependent spouse. Also, he is qualified independently to move to France in search of work, however, his primary claim to live in France is based on the fact that he is accompanying a spouse. Stewie will need to prove that Rupert is a dependent spouse and once that is done, Rupert will have the right to live in France Lois is also an ascendant of Stewie under Directive 2004/38. This is due to the fact that she is the mother of a worker moving into another Member State. Hence, Lois has the right to enter France with her son. Question 2 In this section, a UK based beer manufacturer, Pawtucket Brewery (PB) is trying to export and sell one of its products brands Patriot Ale, to Germany. Patriot Ale is legally marketed and sold in the UK. The German Authorities are refusing to allow Patriot Ale to be sold in Germany on the following grounds: 1. The product is not labelled in German; 2. It contains additives that are not permitted in German beer; 3. The alcohol content is considered to be too high; 4. Requiring the beer to be repackaged in brown glass bottles; 5. Requiring the beer to be marked with the country of manufacture; 6. Requiring the beer to be sold only in bars and pubs and not supermarkets Rules The European Union and its founding organisations sought to promote the free movement of goods, capital, services and people10. Article 34 of the TFEU prohibits quotas and measures meant to have equivalent effects on products from other Member States of the European Union. In a number of cases like Dassonville11, there was the question of whether an applicable qualitative restriction was wrong and a breach of Article 28 of the European Commission Law (which is now Article 34 of TFEU). Also, in other cases that built on the Dassonville case, there is the case of Casson Dijon12 in which Bundesmonopolverwatung sought to import a drink called Casson Dijon from another EU Member State into Germany. This was refused by the German authorities on the grounds that it contained a volume of alcohol that is higher than normal. It was held that such a requirement and demand is equivalent to a qualitative import restriction and was unlawful under Article 28 of the EC (now Article 34 of TFEU). In the case of Keck V Mithouard13, it was held that a national legislation imposing a general prohibition on the resale of a product in an adulterated form was illegal and incompatible with the Article 34 of the TFEU and its related laws. This implies that advertising restrictions are illegal and against the Article which supports the free movement of goods in the European Union. Commission V Germany14 also indicated that a requirement for labelling was contrary to the article for the free movement of goods. And if it requires an exporter or producer to bear extra costs, it is to be construed to be a discrimination against the free movement of goods15. However, in cases where labelling creates a situation where consumers’ safety might be at risk, it is required for important information to be disclosed in a language that most consumers might understand. In determining the language that most consumers can understand, there is the need to factor in important matters like the possibility of using similar words that can be understood in a local context16. Case Analysis Pawtucket Brewery has the right to sue the German authorities for their restrictions under Article 34 of the TFEU which guarantees the free movement of goods in the Common Market. The labelling requirement can be waived if PB proves that it will cause extra money to do so. From the Casson Dijon case, the alcohol content and the additives level requirement can be presented as a quantitative restriction on Patriot Ale. This is because they create major restrictions and limitations in the quest for the presentation of their products into a new and different market. Again, if the repackaging of the Patriot Ale is going to cost extra money to PB, they can take action against the German authorities for trying to restrict their sale in the European Union. Labelling of country of manufacture applies to products from outside the European Union (Article 35). Requiring labelling for a product from the EU is in contravention with Article 34 which prohibits quantitative restrictions. The same applies to the requirement to sell outside supermarkets. This is tantamount to an action meant to create quantitative restrictions and limits on a product from a Member State. Therefore, it is advised for Pawtucket to take action and enforce Article 34 which has direct vertical application against the German authorities. This will be able to force the German authorities to back down on their demands on Patriot Ale and its export into the United States. Question 3 The fundamental issue relates to Peter Griffith Limited (PG) and the effect of a new Regulation of the European Commission 981/2014 which has severe and major consequences on PG. In order to challenge the Regulation, PG will need to understand the import of the Regulation and its impact as well as the extent to which the regulation can and cannot be applied. Rules A Regulation has a general application and it is binding entirely and directly to all Member States17. They must be applied to all states immediately. However, rules in the EU that have a direct application can be challenged by anyone in the European Union. From the Van Gend Loos case, it was established that any EU law that is directly applicable can be challenged by any individual in court18. This will be based on the premise that the regulation in question affects the party in question. In principle, the European Union’s arms and units can reduce the import of goods from outside the European Union. This means that the law cannot be challenged for preventing others from taking money. However, the European Union’s law that requires licensing is problematic. The European Union is formed fundamentally under the principle of the separation of powers. Hence, the European Commission cannot create a law that will require businesses to register and also require businesses to gain license and pay money directly to the Commission. The European Commission has three functions: Executive, Legislative and Enforcement authority19. Therefore, the collection of money directly to the European Commission as a body is questionable. It does not represent the spirit of the rule of law. Also, before the EC bans anything, they must conduct a study and publish it in a journal 15 months before their action is carried out20. This is usually connected to legislation against dumping or sale of dangerous goods. Investigations must be carried out by the EC in the foreign market in question and results must be shown. The principle of proportionality is established in European Union Law and it states that: “the individual should not have his freedom of action limited beyond the degree necessary in the public interest”21. This means that in order to present any kind of law in the European Union, the arm of the EU must ensure that the law that is being put in place will not cause extreme or harsh suffering to any individuals or groups within the European Union. There is a three part test for proportionality to be established. First of all, the measure must be suitable to achieve a given aim. Secondly, it is necessary to achieve the aim in question or is the least restrictive and onerous means available. Thirdly, the measure does not have an excessive effect on the applicant’s interest. Case Analysis PG will have a right as an EU business to take direct action against the European Commission. This is because the EC’s proposed Regulation has direct effect and it has an impact on PG. Therefore, they have a right under EU general principles to sue them. This means PG can take the case on in a domestic court and the domestic court will be required to use procedures acceptable in EU laws and regulations. Secondly, it is apparent that the EC did not present a journal of the circumstances leading to the ban and reduction in imports. Hence, the grounds to ban or reduce imports in PG’s industry seem to be questionable. It is apparent that their way of doing things did not follow standard procedure, so PG can challenge the new regulations. When the case is brought before a court, PG can argue that the law infringes on its rights in terms of proportionality. This is obviously because PG has some kind of arrangements that existed before the regulation came into force. Therefore, he can challenge the notification of the EC requiring him to reduce his imports by 50%. In this case, he must identify existing contracts and existing arrangements that are at risk of being affected if the reduction takes place. Also, other relevant circumstances that will go into a forced liquidation must be presented. This could include existing contracts and other things that are onerous to PG. Case 4 HGL, a UK company is about to enter the French markets and it is proposing a number of measures with its potential French partner, MM. The following areas have several potential clashes with EU law. They include: 1. MM becoming their only authorised distributor in France 2. MM will not export nor advertise their toys outside the European Union 3. HGL will determine the price at which MM will sell their toys. Rules There are numerous laws that are in place in the European Union that goes against the use of what is perceived to be anti-competitive practices in the European Union. The relevant rules are going to be discussed below. Article 101 of the TFEU prevents control of firms over others as a means to create cartels or collude to attain certain ends that might be against the very spirit of competition in the European Union. Article 101 covers almost all business activities and ventures22. This law on collusion and the formation of cartels prevents manipulation and the limitation of competition because of arrangements that are of such nature. Article 101 states that some actions and processes that are undertaken by associations or groups to restrict or distort competition in the EU will be null and void (subsection 2) and this include amongst others: (a) Directly or indirectly fix purchase or selling prices or any other trading conditions; (b) Limit or control production, markets, technical development, or investment; (c) Share markets or sources of supply; (d) Apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) Make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts23. Article 102 of the TFEU also prevents the large and huge entities in a given market from engaging in practices that will restrict other entities from either entering or operating successfully in that market. Hence, the article targets monopolies and oligopolies from coming together to control the markets and processes on the market. However, in most cases, this applied to businesses with 38% and 60% of the market share and this prevents dominance and extreme controls. Case Analysis From the case at hand, HGL is a small UK toy manufacturer. Hence, it will not have issues with Article 102 of the TFEU which seeks to contain the dominance of major and large entities in a given market. In this case, HGL is not a large entity so they cannot be prevented from attaining their ends in this contract with Article 102. However, Article 101 is applicable to most of the cases. This is because some of the practices fall under the scope of what the Article defines as anti-competitive and anti-trust practices. In the first issue of the contract which requires MM to only source from HGL, it can be seen as a limitation of the independence of MM. And this is an infringement of the Article 101. Subsection 1(c) indicates that restricting the share markets and sources of supply of any other business is forbidden and it forms part of the scope of disallowed activities under the Act. Hence, such an agreement is null and void24. Thus, the contract term restricting HGL is not enforceable under EU Law. The second issue which restricts MM from exporting toys outside France is also in contravention with Subsection 1(b) because it seeks to limit production and the scope of operations of MM. This is not in the right spirit of competition in the European Union and again, it is void and cannot be used in any legally binding enforcement or claims. Thirdly, the determination of the price for MM by HGL is in contravention with subsection 1(a) of Article 101. This is because it is an attempt to fix the prices and define how the prices will be determined. This is against the law and it is an anti-competitive practice which gives way to many issues not acceptable by European Union law. Bibliography Books Berry Slapath, Homerwood Mathew & Bogusz Barbara. Complete European Union Law: Text, Cases and Materials. Oxford: Oxford University Press, 2012. Foster Nigel. Foster on European Union Law. Oxford: Oxford University Press. 2013. Kaczarowska Alina. European Union Law. London: Routledge, 2013. Cases Colmi [1999] ECR T-3175 Case 33/97 Commission V Germany [2002] ECR T997 Hofner and Elser V Macrotron GMBH [1991] ECR Case 41/90 International Handelsgesellschaft v Einfuhr- und Vorratsstelle Getreide [1970] ECR 1125 Case 11/70 Keck V Mithouard – Case 268/91 Lawrie Blum V Land Banden-Wur Hamburg [1986] ECR 2121 Piagme [1995] ECR I-2955 Procureur du Roi V Benout and Gustave Dassonville – Case 8/74 Rave-Zentral AG V Bundesmonopolverwatung fur Branntwein – Case 120/78 State V Royer [1978] ECR 487 Van Duyn V Home Office [1974] ECR 1337 Van Gend en Loos v. Nederlandse Administratie der Belastingen Case 26/62 Walrave V Koch [1974] ECR 1405 Statutes Article 34, Treaty on the Functioning of the European Union (TFEU) Article 45, Treaty on the Functioning of the European Union (TFEU) Article 101, Treaty on the Functioning of the European Union (TFEU) European Union Directive 2004/38 European Union Regulation 492/2001 European Union Regulation 1612/68 Read More