Jean Monnet Center at NYU School of Law


1. Introduction

It seems that the EC rules on freedom of movement for goods and persons show some signs of converging around a principle of "market access".1 According to this principle, national legal measures which have the effect of either preventing or seriously hindering access to the home market (or a relevant part of it) from another Member State would either be per se illegal or would have to be justified by a version of the "rule of reason". It has been argued that by displacing the confused and fragmented case-law which has emerged when applying the non-discrimination principle, a market access test would not only introduce greater doctrinal coherence into a currently confused area of law; but it could also create a space for more effective regulatory competition within the EC.

The purpose of this paper is to examine in more detail the relationship between the proposed market access principle and the concept of regulatory competition. We argue that a move to market access would be helpful in clarifying the issues at stake over regulatory competition. At the same time we question whether an unqualified market access principle would achieve the benefits which regulatory competition is meant to bring about. On the contrary, unless the emerging economic jurisprudence of the Court addresses legitimate concerns about the effects of the market access principle on Member State autonomy, the market access test will struggle to gain acceptance.

Our focus on regulatory competition may need some justification. The stated aim of the EC rules on free movement is not regulatory competition, but market integration.2 In so far as they promote market access, the free movement rules also have the effect of protecting what can be seen as fundamental rights in the economic sphere. The debate over regulatory competition, by contrast, is concerned with arrangements for rule-making and the division of powers between state-level bodies and transnational entities, an apparently separate set of issues.

On closer inspection, however, it becomes clear that market access and regulatory competition are two sides of the same coin. Within a federal constitutional framework (or in a transnational entity such as the EC), mobility of economic resources is one of the first preconditions for the emergence of a market in legal rules. When courts review laws of Member States against criteria of how far such laws obstruct, or promote, economic mobility, they are necessarily defining the scope and nature of regulatory competition. Their approach to market access will therefore have profound implications for the nature of the law-making process and for the content of legal rules in a variety of substantive areas as well as for the division of powers, and the doctrines of preemption and subsidiarity. Given the importance of the issues at stake, it would be preferable if these considerations were to be more clearly articulated by the courts as part of a market access test. This would engender a more meaningful debate on the effects of free movement jurisprudence and its relationship to other areas of EC policy making, including harmonising Directives and other forms of policy intervention such as the open method of coordination (OMC). As part of this debate, it should be possible to set more coherent limits to the market access principle than has hitherto been the case.

In developing this argument we outline in section 2 the theoretical foundation of regulatory competition, the so-called pure theory of decentralised law-making, and draw out its legal implications. We then move on in section 3 to a closer examination of the predominant conception of regulatory competition in practice, which we refer to as the model of "competitive federalism", and examine its implications for the market-access test. We find that decisions which make adequate sense when expressed in the customary doctrinal language of free movement and market integration often appear inconsistent when seen through the lens of competitive federalism. In section 4 we argue that much of the difficulty stems from problems with the idea of "competitive federalism", and we consider alternative approaches, both in respect of legislation and judicial intervention, which acknowledge space for diversity in rule-making between the Member States. Section 5 concludes.

1 C Barnard, "Fitting the remaining pieces into the goods and persons jigsaw?" (2001) 26 ELRev 35.

2 See, e.g. Article 14 EC.




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