COMMON MARKET LAW REVIEW CONTENTS Vol. 49 No. 3 June 2012 Editorial comments, Hungary’s new constitutional order and “European unity” Articles J. Bast, New categories of acts after the Lisbon reform: Dynamics of parliamentarization in EU law F. Wagner-von Papp, Best and even better practices in commitment procedures after Alrosa: The dangers of abandoning the “struggle for competition law” R. Nazzini, Administrative enforcement, judicial review and fundamental rights in EU competition law: A comparative contextual-functionalist perspective M. Varju and J. Sándor, Patenting stem cells in Europe: The challenge of multiplicity in European Union law H. de Waele and H. Broeksteeg, The semi-permanent European Council Presidency: Some reflections on the law and early practice B. Hess, The Brussels I Regulation: Recent case law of the Court of Justice and the Commission’s proposed recast Case law A. Court of Justice Case C-366/10, Air Transport Association of America and Others v. Secretary of State for Energy and Climate Change, with annotation by B. Mayer Case C-389/08, Base NV and Others v. Ministerraad, with annotation by M. Szydło Case C-375/09, Prezes Urzedu Ochrony Konkurencji i Konsumentów v. Tele2 Polska sp. z o.o. (now: Netia SA), with annotation by S. Brammer Case C-264/09, Commission v. Slovakia, with annotation by A. Boute Case C-34/10, Oliver Brüstle v. Greenpeace e.V., with annotation by T. Spranger Joined Cases C-509/09 &161/10, eDate Advertising v. X and Olivier Martinez and Robert Martinez v. MGN Limited, with annotation by J.-J. Kuipers Book reviews
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885–928 929–970 971–1006 1007–1038 1039–1074 1075–1112
1113–1140 1141–1162 1163–1178 1179–1196 1197–1210 1211–1232 1233–1266
Aims The Common Market Law Review is designed to function as a medium for the understanding and implementation of European Union Law within the Member States and elsewhere, and for the dissemination of legal thinking on European Union Law matters. It thus aims to meet the needs of both the academic and the practitioner. For practical reasons, English is used as the language of communication.
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[email protected]. Periodicals postage paid at Rahway, N.J. USPS no. 663–170. U.S. Mailing Agent: Mercury Airfreight International Ltd., 365 Blair Road, Avenel, NJ 07001. Published by Kluwer Law International, P.O. Box 316, 2400 AH Alphen aan den Rijn, The Netherlands Printed on acid-free paper.
COMMON MARKET LAW REVIEW
COMMON MARKET LAW REVIEW
Editors: Thomas Ackermann, Loïc Azoulai, Michael Dougan, Christophe Hillion, Sacha Prechal, Wulf-Henning Roth, Ben Smulders, Stefaan Van den Bogaert
Subscription information Online subscription prices for 2012 (Volume 49, 6 issues) are: EUR 696/USD 984/ GBP 512 (covers two concurrent users). Print subscription prices for 2012 (Volume 49, 6 issues): EUR 734/USD 1038/GBP 540. Personal subscription prices at a substantially reduced rate are available upon request. Please contact our sales department for further information at +31 172641562 or at sales@kluwerlaw. com.
Advisory Board: Ulf Bernitz, Stockholm Laurens J. Brinkhorst, The Hague Alan Dashwood, Cambridge Jacqueline Dutheil de la Rochère, Paris Claus-Dieter Ehlermann, Brussels Giorgio Gaja, Florence Walter van Gerven, Leuven Roger Goebel, New York Daniel Halberstam, Ann Arbor Gerard Hogan, Dublin Laurence Idot, Paris Francis Jacobs, London Jean-Paul Jacqué, Brussels Pieter Jan Kuijper, Amsterdam
Ole Lando, Copenhagen Miguel Poiares Maduro, Florence Pierre Pescatore†, Luxembourg Gil Carlos Rodriguez Iglesias, Madrid Allan Rosas, Luxembourg Eleanor Sharpston, Luxembourg Piet Jan Slot, Amsterdam Christiaan W.A. Timmermans, Brussels Ernö Várnáy, Debrecen Armin von Bogdandy, Heidelberg Joseph H.H. Weiler, New York Jan A. Winter, Bloemendaal Miroslaw Wyrzykowski, Warsaw
Associate Editor: Alison McDonnell Common Market Law Review Europa Instituut Steenschuur 25 2311 ES Leiden The Netherlands tel. + 31 71 5277549 e-mail:
[email protected] fax + 31 71 5277600 Aims The Common Market Law Review is designed to function as a medium for the understanding and analysis of European Union Law, and for the dissemination of legal thinking on all matters of European Union Law. It thus aims to meet the needs of both the academic and the practitioner. For practical reasons, English is used as the language of communication. Editorial policy The editors will consider for publication manuscripts by contributors from any country. Articles will be subjected to a review procedure. The author should ensure that the significance of the contribution will be apparent also to readers outside the specific expertise. Special terms and abbreviations should be clearly defined in the text or notes. Accepted manuscripts will be edited, if necessary, to improve the general effectiveness of communication. If editing should be extensive, with a consequent danger of altering the meaning, the manuscript will be returned to the author for approval before type is set. Submission of manuscripts Manuscripts should be submitted, together with a covering letter, to the Associate Editor. At the time the manuscript is submitted, written assurance must be given that the article has not been published, submitted, or accepted elsewhere. The author will be notified of acceptance, rejection or need for revision within three to nine weeks. Authors may be requested to submit a hard copy of their manuscript, in addition to a digital copy, together with a summary of the contents. Manuscripts may range from 3,000 to 8,000 words, approximately 10-24 pages in length. The title of an article should begin with a word useful in indexing and information retrieval. Short titles are invited for use as running heads. All notes should be numbered in sequential order, as cited in the text, *Except for the first note, giving the author’s affiliation. The author should submit biographical data, including his or her current affiliation. © 2012 Kluwer Law International. Printed in the United Kingdom. Further details concerning submission are to be found on the journal’s website http://www.kluwerlawonline.com/productinfo.php?pubcode=COLA
Payments can be made by bank draft, personal cheque, international money order, or UNESCO coupons. Subscription orders should be sent to:
All requests for further information and specimen copies should be addressed to:
Kluwer Law International c/o Turpin Distribution Services Ltd Stratton Business Park Pegasus Drive Biggleswade Bedfordshire SG18 8TQ United Kingdom e-mail:
[email protected]
Kluwer Law International P.O. Box 316 2400 AH Alphen aan den Rijn The Netherlands fax: +31 172641515
or to any subscription agent For Marketing Opportunities please contact
[email protected] Please visit the Common Market Law Review homepage at http://www.kluwerlawonline.com for up-to-date information, tables of contents and to view a FREE online sample copy.
Consent to publish in this journal entails the author’s irrevocable and exclusive authorization of the publisher to collect any sums or considerations for copying or reproduction payable by third parties (as mentioned in Article 17, paragraph 2, of the Dutch Copyright act of 1912 and in the Royal Decree of 20 June 1974 (S.351) pursuant to Article 16b of the Dutch Copyright act of 1912) and/or to act in or out of court in connection herewith. Microfilm and Microfiche editions of this journal are available from University Microfilms International, 300 North Zeeb Road, Ann Arbor, MI 48106, USA. The Common Market Law Review is indexed/abstracted in Current Contents/Social & Behavioral Sciences; Current Legal Sociology; Data Juridica; European Access; European Legal Journals Index; IBZ-CD-ROM: IBZ-Online; IBZ-lnternational Bibliography of Periodical literature on the Humanities and Social Sciences; Index to Foreign Legal Periodicals; International Political Science Abstracts; The ISI Alerting Services; Legal Journals Index; RAVE; Social Sciences Citation Index; Social Scisearch.
Book reviews
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Jean-Michel Glachant, Dominique Finon and Adrien de Hauteclocque (Eds.), Competition, Contracts and Electricity Markets: A New Perspective. Cheltenham: Edward Elgar, 2011. 312 pages. ISBN: 9781849804790. GBP 89.95. Over the last two decades, liberalization of the electricity markets of the EU Member States and establishment of the internal market for electricity have been high on the agenda of the EU institutions. All the more, the cornerstone of the three packages of liberalization legislation adopted by the EU in the electricity sector concerns progressive introduction of stricter measures aimed at achieving unbundling of the formerly vertically integrated electricity companies. Unbundling implies that the different activities of the electricity sector are carried out by separate entities, which interact through contractual relations, while competition is introduced in the generation and supply markets. In addition, in order to stimulate competition among market players both at the wholesale and at the retail level, long-term contracts (LTC) are subject to a strict review both by the European Commission and by the national regulatory (NRA) and competition authorities (NCA). LTCs, in fact, could foreclose the entry of new players in the market, by thus hampering the development of competitive markets. In a long term, the liberalization of electricity markets is expected to allow final consumers to purchase electricity at the best conditions within an internal EU electricity market. Since the beginning of the liberalization process, the EU policy makers have relied on the mainstream economic literature promoting a critical approach towards LTC and vertical integration, the latter being considered among the main factors hampering the development of competitive electricity markets. The book reviewed here challenges the traditional critical view vis-a-vis LTC and the vertical integration of the electricity markets, by arguing that these arrangements, being natural characteristics of the sector, are needed for attracting investment and developing optimal mix of technologies in the electricity sector. It includes a collection of papers resulting from a research project entitled “Efficiency, Competition and Long-Term Contracts in Electricity Markets”, carried out between 2007 and 2009 by the Laboratoire
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d’Analyse Economique des Reseaux et des Systems Energetique (LARSEN). The results of the research project were presented in January 2009 in a workshop co-organized by LARSEN and by the Loyola de Palacio program of the European University Institute. The workshop allowed 42 experts to gather together in order to openly discuss the issue of LTC in the European decentralized electricity markets. The eleven contributions to the book are divided in three parts, discussing three broader topics: the first five papers undertake an economic analysis of the possible efficiencies of LTC and vertical integration; the second part is dedicated to the assessment of the tension between LTC and competition rules in the electricity markets; finally, the last three contributions analyse the approach of competition law concerning LTC, and they compare LTC in the electricity sector with the LTC concluded in other network industries. In the last two decades, EU policy makers have strongly relied on the economic theories of free competitive markets in order to justify measures aiming at unbundling vertically integrated electricity companies. On the contrary, the contributions included in the first part of the book argue that LTC and vertical integration may be efficient arrangements, since they encourage investments in capital-intensive/low-carbon technologies and help in diversifying generation inputs in order to safeguard security of supply. The five papers in part 1 support this stance by relying on different empirical data. In particular, the paper by Boucher and Smeers challenges the Commission’s view that competition at the wholesale level helps safeguard security of supply. According to the authors, production of electricity through coal is necessary to address the problem of security of supply in Europe in time of gas disruptions. However, coal capacities for addressing SoS have very risky cash flows: electricity generators would make profits from coal production only in cases of disruption of gas supply, so investments in coal generation plants are highly speculative. Consequently, only bilateral LTC with the major buyers would create a sufficient incentive for generators to invest in this type of technology. Besides safeguarding SoS, LTC facilitate the development of low carbon technologies. By analysing the impact of contractual arrangements on the choice of power generation technologies, Roques finds that LTC play a critical role in facilitating the deployment of capital-intensive low carbon technologies, such as nuclear and renewable energy sources. In his paper, Finon achieves similar conclusions by analysing the consequences of imperfect allocation of risks among generators and consumers on choice of generation technologies. According to the author, competition does not allow the natural transfer of risk from the producers to the consumers. Therefore, only a combination of vertical integration and LTC are appropriate instruments to efficiently allocate risks, the latter being an indispensable condition to allow the generators to invest in low-carbon / capital-intensive technologies. Finally, the last two papers in this section analyse factors that might negatively affect the negotiating capacity of the market players in an imperfect competitive environment. In particular, Meade and O’Connor analyse a number of market failures (i.e. information asymmetries and generator market power), which often make the electricity supply contracts imbalanced. The authors conclude that a high level of vertical integration should not be considered a cause of concern, but rather a natural structure of the electricity market. Similarly, by analysing transport contracts in gas markets, Brunekreeft argues in favour of the necessity of exemption from Third Party Access rules for the development of interconnectors in the gas markets; LTC are seen as an indispensable condition to develop the gas transport network and the interconnectors. Traditionally, LTC have been considered as foreclosing entry at wholesale and retail level and limiting the ability of the NRAs to monitor the prices at wholesale level as well as generation costs. By relying on industrial organizational theory, the papers included in the second part of the book provide an opposite view: LTC rather support new entry in the generation market, and they do not negatively affect final customers. Meunier reviews the existing economic literature on LTC, which traditionally criticizes the exclusive dealing clauses included in LTC. According to Meunier, LTC do not represent an obstacle for new entrants per se; LTC can have an exclusionary effect only if a new entrant is absent at the contracting stage or if the contractual environment is too limited. Besides not being in itself an obstacle to new entrants, exclusive clauses in LTC may also benefit the large electricity customers from power
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intensive industries. This is the main argument put forward by Longva, who challenges the Commission’s critical approach vis-à-vis exclusive clauses included in LTC in order to facilitate the ability of customers to switch supplier. According to the author, large customers from power intensive industries prefer LTC which fix price and quantity of electricity purchased over a long period of time, since such clauses decrease the risk of unexpected price increases which may negatively affect their business activities. Finally, Mulder analyses the impact of LTC on new entrants and on the welfare of final consumers, taking in consideration the Dutch electricity market. The findings of the case study confirm the conclusions of Longva and Meunier: high degree of market concentration rather than LTC negatively affect competition at the wholesale level, while in the retail market final customers are not negatively affected by LTC since regulation grants them the possibility to cancel their supply contract. The third part analyses how LTC are treated under EU competition and State aid law. The contributions included in this section show that the specificities of the electricity market are increasingly taken into account by NCA and by the Commission in reviewing LTC. For instance, according to De Hautecloque and Glachant, in the last years the Commission has been increasingly keen on balancing anti-competitive effects and efficiency gains when analysing LTC. Such shift is due to the new economic approach implemented by the Commission in competition analysis. Nevertheless, the authors concluded that a number of procedural aspects and the range of competition law remedies available limit the Commission’s ability to take fully in consideration the efficiency gains generated by LTC. Furthermore, the new approach of the Commission towards LTC can also be noticed in the area of State aids. In her contribution, Hancher analyses two decisions adopted by the Commission against Poland and Hungary, condemning power purchase agreements (PPA) as State aid under Article 107(1) TFEU. The two decisions signal a new direction in the application of the European State aids rules to deal with LTC in the electricity sector: in its decisions, the Commission discussed the most efficient way to allocate risk among different market participants, analysing which form of vertical arrangement would have allowed the most effective way to allocate risk. Finally, the concluding chapter from De Hautecloque, Marty and Pillot discusses the application of the essential facility doctrine in the European energy sector. The authors conclude that, even though this doctrine is widely accepted in Europe, there may be good reasons to derogate from its application in the energy sector. In particular, by analysing the case of the nuclear capacity in France, the authors argue in favour of safeguarding the need to protect long-term investments in power generation – choice that may require the Commission and the NCA not to apply the essential facility doctrine in the energy sector. As the title suggests, the book provides a “new perspective” on the liberalization of the electricity markets in Europe. The book is certainly innovative and it satisfies its ambitious title. In particular, the different contributions allow an analysis of LTC and vertical integration from different angles. Especially, the multidisciplinary approach taken in the book, with contributions both from economists (i.e. part 1 and 2) and lawyers (i.e. part 3), enriches the analysis. The book has a remarkable feature: even though it is an edited book, all the contributions deliver a consistent policy message which criticizes the traditional sceptical approach of the orthodox economics literature and of the EU policy makers in relation to LTC and forms of vertical integration in the electricity sector. Using legal and economic arguments, the book shows that vertical arrangements may be more efficient than an imperfect competition regime. Among the benefits generated by vertical arrangements it is worth mentioning the possibility to diversify input of energy generation and thus safeguard security of supply, increase generators’ incentives to invest in low carbon technologies which are capital intensive, and the preference of large customers from power intensive industries for LTC which decrease their risks. Furthermore, the book also shows that the negative effects of vertical arrangements (i.e. foreclosure of the market for new entrants) are often overestimated and that, instead, concentration of the markets is reason for concern. The implicit message of the book, which has been articulated only in separate articles up until now, is that so far the liberalization process of the electricity market in Europe has not been particularly successful. A “symptom” of this failure is that at the retail level final customers are
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reluctant to switch supplier, and they rather prefer long-term supply contracts. The fact that the full opening of the electricity markets for household customers was not achieved in 2007 and that doubts remain even about the feasibility of 2014 as new target date is a simple example of the current “fatigue” in completing the liberalization process of the electricity markets in Europe. From this point of view, the book seems to suggest the need to re-think the speed and the manner of the liberalization process, by challenging the tradition critical view towards LTC and forms of vertical integration. The book does not provide exhaustive final conclusions, but opens the door for further debate among academics and policy makers about the need to re-discuss the main aspects of the liberalization process of the electricity markets in Europe. Rozeta Karova Vienna
COMMON MARKET LAW REVIEW
COMMON MARKET LAW REVIEW
Editors: Thomas Ackermann, Loïc Azoulai, Michael Dougan, Christophe Hillion, Sacha Prechal, Wulf-Henning Roth, Ben Smulders, Stefaan Van den Bogaert
Subscription information Online subscription prices for 2012 (Volume 49, 6 issues) are: EUR 696/USD 984/ GBP 512 (covers two concurrent users). Print subscription prices for 2012 (Volume 49, 6 issues): EUR 734/USD 1038/GBP 540. Personal subscription prices at a substantially reduced rate are available upon request. Please contact our sales department for further information at +31 172641562 or at sales@kluwerlaw. com.
Advisory Board: Ulf Bernitz, Stockholm Laurens J. Brinkhorst, The Hague Alan Dashwood, Cambridge Jacqueline Dutheil de la Rochère, Paris Claus-Dieter Ehlermann, Brussels Giorgio Gaja, Florence Walter van Gerven, Leuven Roger Goebel, New York Daniel Halberstam, Ann Arbor Gerard Hogan, Dublin Laurence Idot, Paris Francis Jacobs, London Jean-Paul Jacqué, Brussels Pieter Jan Kuijper, Amsterdam
Ole Lando, Copenhagen Miguel Poiares Maduro, Florence Pierre Pescatore†, Luxembourg Gil Carlos Rodriguez Iglesias, Madrid Allan Rosas, Luxembourg Eleanor Sharpston, Luxembourg Piet Jan Slot, Amsterdam Christiaan W.A. Timmermans, Brussels Ernö Várnáy, Debrecen Armin von Bogdandy, Heidelberg Joseph H.H. Weiler, New York Jan A. Winter, Bloemendaal Miroslaw Wyrzykowski, Warsaw
Associate Editor: Alison McDonnell Common Market Law Review Europa Instituut Steenschuur 25 2311 ES Leiden The Netherlands tel. + 31 71 5277549 e-mail:
[email protected] fax + 31 71 5277600 Aims The Common Market Law Review is designed to function as a medium for the understanding and analysis of European Union Law, and for the dissemination of legal thinking on all matters of European Union Law. It thus aims to meet the needs of both the academic and the practitioner. For practical reasons, English is used as the language of communication. Editorial policy The editors will consider for publication manuscripts by contributors from any country. Articles will be subjected to a review procedure. The author should ensure that the significance of the contribution will be apparent also to readers outside the specific expertise. Special terms and abbreviations should be clearly defined in the text or notes. Accepted manuscripts will be edited, if necessary, to improve the general effectiveness of communication. If editing should be extensive, with a consequent danger of altering the meaning, the manuscript will be returned to the author for approval before type is set. Submission of manuscripts Manuscripts should be submitted, together with a covering letter, to the Associate Editor. At the time the manuscript is submitted, written assurance must be given that the article has not been published, submitted, or accepted elsewhere. The author will be notified of acceptance, rejection or need for revision within three to nine weeks. Authors may be requested to submit a hard copy of their manuscript, in addition to a digital copy, together with a summary of the contents. Manuscripts may range from 3,000 to 8,000 words, approximately 10-24 pages in length. The title of an article should begin with a word useful in indexing and information retrieval. Short titles are invited for use as running heads. All notes should be numbered in sequential order, as cited in the text, *Except for the first note, giving the author’s affiliation. The author should submit biographical data, including his or her current affiliation. © 2012 Kluwer Law International. Printed in the United Kingdom. Further details concerning submission are to be found on the journal’s website http://www.kluwerlawonline.com/productinfo.php?pubcode=COLA
Payments can be made by bank draft, personal cheque, international money order, or UNESCO coupons. Subscription orders should be sent to:
All requests for further information and specimen copies should be addressed to:
Kluwer Law International c/o Turpin Distribution Services Ltd Stratton Business Park Pegasus Drive Biggleswade Bedfordshire SG18 8TQ United Kingdom e-mail:
[email protected]
Kluwer Law International P.O. Box 316 2400 AH Alphen aan den Rijn The Netherlands fax: +31 172641515
or to any subscription agent For Marketing Opportunities please contact
[email protected] Please visit the Common Market Law Review homepage at http://www.kluwerlawonline.com for up-to-date information, tables of contents and to view a FREE online sample copy.
Consent to publish in this journal entails the author’s irrevocable and exclusive authorization of the publisher to collect any sums or considerations for copying or reproduction payable by third parties (as mentioned in Article 17, paragraph 2, of the Dutch Copyright act of 1912 and in the Royal Decree of 20 June 1974 (S.351) pursuant to Article 16b of the Dutch Copyright act of 1912) and/or to act in or out of court in connection herewith. Microfilm and Microfiche editions of this journal are available from University Microfilms International, 300 North Zeeb Road, Ann Arbor, MI 48106, USA. The Common Market Law Review is indexed/abstracted in Current Contents/Social & Behavioral Sciences; Current Legal Sociology; Data Juridica; European Access; European Legal Journals Index; IBZ-CD-ROM: IBZ-Online; IBZ-lnternational Bibliography of Periodical literature on the Humanities and Social Sciences; Index to Foreign Legal Periodicals; International Political Science Abstracts; The ISI Alerting Services; Legal Journals Index; RAVE; Social Sciences Citation Index; Social Scisearch.
