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 JOHN FAIRHURST

8TH E D I TI ON
8TH EDITION
Law of the European Union is at the forefront of developments in this
dynamic area of law. It includes a detailed exploration and explanation of
the Union’s constitutional, administrative and substantive law. At the outset
8TH
EDITION
law of the
european union

european union
law of the
there is an explanation of the legislative source of each area of Union law.
This is complemented by extensive references to judgments of the Court of JOHN FAIRHURST
Justice of the European Union, where the Court has interpreted and applied
these legislative sources. law of the
All chapters have been fully updated and revised for the eighth edition to
european union
reflect the law as at 31 January 2010. The changes introduced by the Treaty
of Lisbon (which came into force on 1 December 2009) have been fully
incorporated throughout.
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This textbook provides a wealth of learning support features, including:

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• Diagrams and flowcharts which make it easier to understand some of the Do you want to give yourself a head start
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Union’s difficult concepts and procedures
• Clearly distinguished case summaries which are easily recognisable and Visit www.mylawchamber.co.uk/fairhurst to
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• Marginal cross-references which provide links to other material within the
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sample exam questions with answer guidance,
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of Amsterdam (when it came into force on 1 May 1999), and the second resource are highlighted throughout this book.
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C AS E

ABOUT THE AUTHOR POWERED BY

PROFESSOR JOHN FAIRHURST BA PgDip MPhil Solicitor is Head of the Law A

R
N

V I G AT O

School at Birmingham City University. He was previously an Associate Dean

FAIRHURST
Lecturers: Register online for access to a
and Head of Law at Anglia Ruskin University, prior to which he was a Jean testbank of multiple-choice questions that can be
Monnet Tutor in EU Law and Course Director of the Postgraduate Diploma in customised and used to assess students’ progress.
Law (CPE) programme at the University of Huddersfield.

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Law of the European Union
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Eighth Edition

Law of the European Union

JOHN FAIRHURST
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First published 1996

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Fairhurst, John.
Law of the European Union / John Fairhurst. – 8th ed.
p. cm.
ISBN 978-1-4082-4544-6 (pbk.)
1. Law–European Union countries. 2. Courts–European Union countries. 3. European
Union. I. Title.
KJE947.F342 2010
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2010017068

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Typeset in 9/12pt Stone Serif by 35

Printed by Ashford Colour Press Ltd., Gosport
Brief contents

Contents vii
Preface to the eighth edition xvi
Preface to the first edition xix
Guided tour xxii
Table of cases before the Court of Justice of the European Union (numerical) xxv
Table of cases before the Court of Justice of the European Union (alphabetical) xlv
Table of cases before the European Court of Human Rights lxv
Table of cases before national courts lxvi
Table of European Union Decisions lxviii
Table of European Union Treaties lxix
Table of equivalences referred to in Article 12 of the Treaty of Amsterdam
(pre-Treaty of Lisbon) lxxxii
Tables of equivalences as referred to in Article 5 of the Treaty of Lisbon xcv
Table of other Treaties cxxi
Table of European Union Regulations cxxiii
Table of European Union Directives cxxvii
Rules of Procedure of the Court of Justice of the European Union cxxxi
Table of Statutes cxxxii
Table of Statutory Instruments cxxxiv
List of abbreviations cxxxvii

Part 1 Constitutional and administrative law of

the European Union 1
1 An introduction to the European Communities and the
European Union 3
2 Sources of EU law 56
3 Institutions and related bodies of the EU 87
4 The decision-making process 125
5 The Court of Justice of the European Union 151
6 Preliminary ruling jurisdiction of the Court of Justice
(Article 267 TFEU) 172
7 Direct actions against Member States (Articles 258–260 TFEU) 196
8 Judicial review of acts of Union institutions 220
9 Principles of supremacy, direct effect, indirect effect and
state liability 261

v
Brief contents

10 Applying EU law in the English Courts and adapting

English remedies to the requirements of EU law 303

Part 2 The free movement of persons and services, and rights

of establishment 311
1 1 European Union citizenship and free movement rights 313
12 Free movement of workers 354
13 Freedom of establishment and the provision and receipt
of services 408
14 Social security 474
15 Limitations on the free movement of persons 495
16 Free movement rights in the United Kingdom 516

Part 3 The free movement of goods 545

17 Customs duties and internal taxation 547
18 The elimination of quantitative restrictions and measures
having an equivalent effect 577

Part 4 Union competition law 639

19 State monopolies and state aid 64 1
20 Cartels and restrictive agreements: Article 101 TFEU 66 1
21 Abuse of a dominant position and mergers: Article 102 TFEU 693
22 Enforcement of Union competition law: powers and procedures 713

Glossary 760
Index 78 1

vi
Contents

Preface to the eighth edition xvi

Preface to the first edition xix
Guided tour xxii
Table of cases before the Court of Justice of the European Union (numerical) xxv
Table of cases before the Court of Justice of the European Union (alphabetical) xlv
Table of cases before the European Court of Human Rights lxv
Table of cases before national courts lxvi
Table of European Union Decisions lxviii
Table of European Union Treaties lxix
Table of equivalences referred to in Article 12 of the Treaty of Amsterdam
(pre-Treaty of Lisbon) lxxxii
Table of equivalences as referred to in Article 5 of the Treaty of Lisbon xcv
Table of other Treaties cxxi
Table of European Union Regulations cxxiii
Table of European Union Directives cxxvii
Rules of Procedure of the Court of Justice of the European Union cxxxi
Table of Statutes cxxxii
Table of Statutory Instruments cxxxiv
List of abbreviations cxxxvii

Part 1 Constitutional and administrative law of the

European Union 1

1 An introduction to the European Communities and the

European Union 3
Aims and objectives 3
The post-war years 3
23 July 1952: the European Coal and Steel Community 5
1 July 1958: the European Economic Community and the European
Atomic Energy Community 6
8 April 1965: merger of the institutions 8
1 July 1973: enlargement 8
1 January 1981: enlargement 9
1 January 1986: enlargement 9
1 July 1987: the Single European Act 9
1 November 1993: the Treaty on European Union 11
1 January 1995: enlargement 16

vii
Contents

1 May 1999: the Treaty of Amsterdam 17

1 February 2003: the Treaty of Nice 22
1 May 2004: enlargement 24
1 January 2007: enlargement 25
2009: the Treaty of Lisbon 25
Future enlargement 47
A two-speed Europe? 51
The European Economic Area 52
The Council of Europe, the European Convention on Human Rights
and the European Court of Human Rights: a structure outside the
European Union 52
Summary 53
Reference 54
Further reading 54

2 Sources of EU law 56
Aims and objectives 56
The sources of EU law 56
The EU Treaties 57
Secondary legislation made under the EU Treaties 64
Soft law 67
Related treaties made between the Member States 68
International treaties negotiated by the Union under powers
conferred by the EU Treaties 68
Decisions of the Court of Justice of the European Union 68
Fundamental rights and general principles of law 69
Summary 85
References 85
Further reading 85

3 Institutions and related bodies of the EU 87

Aims and objectives 87
Treaty of Lisbon 87
The institutional framework 88
The European Council 89
The Commission 90
The High Representative of the Union for Foreign Affairs and
Security Policy 106
The Council 107
The European Parliament 111
Court of Auditors 119
The European Central Bank 120
The Economic and Social Committee (ECOSOC) 120
The Committee of the Regions 122
Summary 123

viii
 Contents

Reference 123
Further reading 123

4 The decision-making process 125

Aims and objectives 125
Treaty of Lisbon 125
Decision-making within the Union 125
Dialogue between the Commission, Council and European Parliament 126
Legislative proposals 126
Voting procedures 128
The legislative process 134
The involvement of national Parliaments 141
Treaty amendments 146
The appropriate legal base 147
Summary 149
Reference 149
Further reading 149

5 The Court of Justice of the European Union 151

Aims and objectives 151
Treaty of Lisbon 151
Introduction 152
The Court of Justice 153
Precedent 1 61
Methods of interpretation 162
The General Court 166
Specialised courts 168
The jurisdiction of the Court of Justice of the European Union 169
Summary 170
Further reading 170

6 Preliminary ruling jurisdiction of the Court of Justice

(Article 267 TFEU) 172
Aims and objectives 172
Treaty of Lisbon 172
Introduction to the Court of Justice’s preliminary ruling jurisdiction 173
References from national courts under Article 267 TFEU 177
Summary 193
Further reading 193

7 Direct actions against Member States

(Articles 258–260 TFEU) 196
Aims and objectives 196
Treaty of Lisbon 196
The obligation of Member States under the Treaties 197
The stages of Article 258 TFEU proceedings 199

ix
Contents

Pecuniary penalty: Article 260 TFEU 207

Interim measures 216
Other direct actions against Member States 218
Summary 218
Further reading 219

8 Judicial review of acts of Union institutions 220

Aims and objectives 220
Treaty of Lisbon 220
Legality of Union acts: Article 263 TFEU 221
Challenging a failure to act: Article 265 TFEU 252
Claims for damages against Union institutions for unlawful acts:
Article 340 TFEU 253
Summary 259
Further reading 260

9 Principles of supremacy, direct effect, indirect effect

and state liability 261
Aims and objectives 261
Treaty of Lisbon 261
The supremacy of Union law 262
Article 258 TFEU – ineffective means of enforcement 264
Development of Union law principles 265
The principle of direct effect 266
The principle of indirect effect 283
The principle of state liability 284
Application of the principles of direct and indirect effect in UK Courts 291
Unimplemented directives: a continuing problem 296
Enforcement of a directive in the national courts: the correct approach 297
Summary 299
References 301
Further reading 301

10 Applying EU law in the English Courts and adapting

English remedies to the requirements of EU law 303
Aims and objectives 303
Treaty of Lisbon 303
The Union approach to legal remedies 303
Public law remedies: judicial review 305
Claims in tort against the state 306
Claims in tort between private individuals for breaches of
Treaty provisions 307
Union law as the basis for a claim in contract, a defence in
breach of contract proceedings, and for claims in quasi-contract 308
Union law as a defence in criminal proceedings 309

x
 Contents

Summary 309
References 310
Further reading 310

Part 2 The free movement of persons and services,

and rights of establishment 311

11 European Union citizenship and free movement rights 313

Aims and objectives 313
Treaty of Lisbon 313
Introduction to the free movement of persons 314
EU citizenship 314
Free movement rights 329
Directive 2004/38: right of entry and residence 332
Other rights derived from EU citizenship 342
Free movement rights of non-EU citizens 343
The Schengen acquis and its integration into the
European Union 345
Summary 351
Further reading 352

12 Free movement of workers 354

Aims and objectives 354
Treaty of Lisbon 354
Introduction to the free movement of workers 355
Scope of the term ‘worker’ 358
Work-seekers 363
The worker’s family 365
The exercise of workers’ rights 369
Equal access to employment, housing, education and social rights
under Regulation 1612/68 378
May 2004 enlargement – transitional arrangements 404
January 2007 enlargement – transitional arrangements 405
Summary 405
Reference 405
Further reading 406

13 Freedom of establishment and the provision and

receipt of services 408
Aims and objectives 408
Treaty of Lisbon 408
The TFEU and Directive 2004/38 409
Providers of services 411
Recipients of services 423

xi
Contents

Directive 2006/123: the Services Directive 431

The provision of services and rights of establishment 434
Obstacles to establishment 435
Rights of entry and residence 439
Equal treatment 447
The ‘official authority’ exception 448
Professional qualifications 449
Directive 2005/36: the recognition of professional qualifications 455
Other qualifications 463
Summary 471
Further reading 472

14 Social security 474

Aims and objectives 474
Treaty of Lisbon 474
Introduction to social security 475
The beneficiaries of Regulation 883/2004 476
The principles of Article 48 TFEU 479
Social assistance and social advantages 484
Regulation 883/2004: the substantive provisions 485
Social security and social assistance in the UK 490
Summary 493
References 493
Further reading 493

15 Limitations on the free movement of persons 495

Aims and objectives 495
Treaty of Lisbon 495
The TFEU and Directive 2004/38 495
Public policy and public security 496
Public health 509
Procedural protection 510
The Schengen Agreement and Directive 2004/38 513
Summary 514
Further reading 515

16 Free movement rights in the United Kingdom 516

Aims and objectives 516
The UK approach to free movement: the island problem 516
Scope of the Immigration (European Economic Area)
Regulations 2006 517
Transposition of EU Directive 2004/38 within the UK: the UK’s EEA
Regulations 2006 527
Summary 543
Further reading 544

xii
 Contents

Part 3 The free movement of goods 545

17 Customs duties and internal taxation 547

Aims and objectives 547
Treaty of Lisbon 547
Introduction to the free movement of goods 548
Articles 28 and 30 TFEU: the elimination of border charges and
fiscal barriers 549
Customs duty or internal taxation? 559
Article 110 TFEU: discriminatory and protectionist internal taxation 562
Summary 574
Further reading 575

18 The elimination of quantitative restrictions and

measures having an equivalent effect 577
Aims and objectives 577
Treaty of Lisbon 577
An introduction to Articles 34–36 TFEU 578
State measures 579
Quantitative restrictions (QRs) 582
Measures having equivalent effect to quantitative restrictions (MEQRs) 583
Distinctly applicable measures 585
Indistinctly applicable measures 591
Article 35 TFEU: exports 601
Article 36 TFEU: defences to distinctly and indistinctly
applicable measures 602
Article 36 TFEU and the UK’s implementation of the free
movement of goods 615
The Cassis rule of reason: defences to indistinctly applicable measures 616
Overcoming barriers created by differing national standards 632
Summary 634
Further reading 636

Part 4 Union competition law 639

19 State monopolies and state aid 641

Aims and objectives 641
Treaty of Lisbon 641
Introduction to state monopolies and state aid 642
State monopolies 642

xiii
Contents

State aid 647

The Commission’s role of monitoring the grant of state aid 655
Summary 658
Reference 659
Further reading 659

20 Cartels and restrictive agreements: Article 101 TFEU 661

Aims and objectives 661
Treaty of Lisbon 661
Competition law and policy 661
Article 101 TFEU 663
Summary 691
Reference 691
Further reading 691

21 Abuse of a dominant position and mergers:

Article 102 TFEU 693
Aims and objectives 693
Treaty of Lisbon 693
Introduction 693
Article 102 TFEU: a dominant position 694
Article 102 TFEU: abuse of a dominant position 698
Article 102 TFEU: affecting trade between Member States 705
Relationship between Articles 101(1) and 102 TFEU: collective dominance? 706
Mergers 708
Summary 711
Reference 711
Further reading 711

22 Enforcement of Union competition law: powers

and procedures 713
Aims and objectives 713
Treaty of Lisbon 713
Introduction 714
Initiating action by the Commission and the Member States 715
Applications by parties to a possible infringement 728
The provision of information 730
Powers of investigation 733
The right to a hearing 738
The decision 741
Fines and periodic penalty payments 743
Relationship between the Commission, and the competition authorities
and courts of the Member States 747
The role of national competition authorities and courts in the
enforcement of Union competition law 752
Relationship between Union and national competition law 754

xiv
 Contents

Enforcing Union competition law in UK courts 755

Summary 757
References 757
Further reading 757

Glossary 760
Index 781

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xv
 Preface to the eighth edition

Since the seventh edition of this book was published, the most important event in the
continuing evolution of the European Union has been the ratification, and coming into
force, of the Treaty of Lisbon (ToL).
Following Ireland’s initial rejection of the ToL in a national referendum, the EU and
Ireland reached an agreement which paved the way for a second referendum. Ireland
held this second referendum on 2 October 2009 when 67.13 per cent voted in favour.
Poland and the Czech Republic were awaiting the result of Ireland’s second referendum
before finally ratifying the Treaty. The Polish President (Lech Kaczyński) approved the
Treaty immediately following the positive referendum vote in Ireland.
The position in the Czech Republic was more problematic. Although the ToL had been
approved by both houses of the Czech Parliament, the Czech President (Václav Klaus)
continued to withhold his approval. He raised concerns about the implications for the
Czech Republic once the Charter of Fundamental Rights of the European Union was
given formal legal recognition by the ToL. Article 6(1) TEU, as amended by the ToL,
provides that the Union shall ‘recognise the rights, freedoms and principles set out in the
Charter of Fundamental Rights of the European Union’. The UK and Poland had already
sought assurances that the Charter would not be indirectly incorporated into their
national law (and this assurance is contained in Art 1, Protocol No 30 (which is annexed
to the TEU and TFEU)). In order to secure the Czech Republic President’s signature to the
Treaty, it was agreed that at the time of the conclusion of the next Accession Treaty
(when new Member States are admitted to the European Union), a new Protocol will
be added to both the TEU and TFEU to provide that Protocol No 30 will also apply to the
Czech Republic. The next Accession Treaty is likely to be concluded during 2010 or 2011
to pave the way for Croatia’s and/or Iceland’s entry to the EU. This was sufficient to
secure the support of the President of the Czech Republic. However, a further complica-
tion arose following a legal challenge on the compatibility of the Treaty with the Czech
Constitution. The Czech Constitutional Court dismissed the application on 3 November
2009, and later the same day the Czech Republic President gave final approval to the
ToL. Having now been ratified by all 27 Member States, the ToL came into force on
1 December 2009.
Many of the changes that would have been implemented by the proposed Constitu-
tional Treaty are replicated by the ToL. However, whereas the proposed Constitutional
Treaty would have replaced the TEU and EC Treaty, the ToL has retained and amended both
these Treaties. The EC Treaty has been renamed the Treaty on the Functioning of the
European Union (TFEU). The Union has replaced and succeeded the Community (Art 1
TEU). Throughout the TFEU, the word ‘Community’ has been replaced with the word
‘Union’. The following terms are therefore no longer used: European Community; European
Communities; or Community law. Reference is made solely to the European Union (or
Union) and European Union law (or Union law). The TEU and the TFEU constitute the
Treaties on which the Union is founded (Art 1 TEU).
The articles within both the TEU and TFEU have been renumbered as part of a
simplification exercise. The Treaty of Amsterdam (ToA) renumbered the provisions of the

xvi
 Preface to the eighth edition

TEU and the EC Treaty when it came into force on 1 May 1999. The renumbering of
both these Treaties by the ToL will therefore be the second time this has occurred. Two
tables of equivalence are published at the beginning of this book. The first table relates
to the renumbering made by the ToA, and the second relates to the renumbering made
by the ToL. Throughout this eighth edition, references are made to the new (post-ToL)
Treaty numbers but, where appropriate, there are cross-references to old Treaty numbers
(pre-ToL).
In addition to covering the changes introduced by the ToL, within this new edition I
have included other legislative changes and recent judgments of the Court of Justice and
Court of First Instance (which has now been renamed the General Court). The format of
this edition follows the same format as the previous edition.
Part 1 (Constitutional and Administrative Law of the European Union) has been
substantially revised to incorporate the changes introduced by the ToL. Throughout
Chapters 1 to 5 in particular, there is a thorough review of the ToL’s impact on the
Union’s constitutional structure.
Chapter 1 consists of an introduction to the European Communities and the European
Union. This chapter contains a historical analysis of the evolution of the European
Union. Chapter 2 is devoted to the sources of Union law, including a commentary on
fundamental rights and the European Convention on Human Rights. The rationale for
this approach is that I consider it preferable to have an understanding of such sources
before embarking upon a consideration of the Union institutions (Chapter 3) and the
decision-making process (Chapter 4). There is a separate chapter on the Court of Justice
of the European Union (which now consists of the Court of Justice, the General Court
and the specialised courts), together with its methods of interpretation (Chapter 5).
Chapters 6–8 are devoted to the preliminary ruling jurisdiction of the Court of Justice
(Art 267 TFEU (previously Art 234 EC Treaty)), direct actions against Member States
(Arts 258–260 TFEU (previously Arts 226–228 EC Treaty)), and judicial review of acts of
the Union institutions, respectively.
Within Chapter 7 there is an explanation of a new provision: Art 260(3) TFEU. Article
260(3) TFEU provides that if the Commission brings Art 258 TFEU proceedings before
the Court of Justice against a Member State which has failed to implement a directive, if
the Commission considers it appropriate it may specify a lump sum or penalty payment
which the Member State should be required to pay. If the Court subsequently finds the
Member State to be in breach of its Union law obligations, it can impose the lump sum
or penalty payment on the Member State, but the amount must not exceed that specified
by the Commission. This new financial penalty provision will go some way to address-
ing the deficiency in the former Art 226 EC Treaty (now Art 258 TFEU) procedure when
used against a Member State which has flagrantly failed to implement a directive.
Chapter 9 examines the principles of supremacy, direct and indirect effect, and state
liability and their application in UK courts. Within this eighth edition I have included
further commentary on the ‘conflict’ between the EU’s principle of supremacy and the
UK’s doctrine of parliamentary sovereignty. The final chapter of Part 1 (Chapter 10) is
devoted to the application of Union law in UK courts and the adapting of remedies to
the requirements of Union law.
The final three parts of the book (Parts 2 to 4) relate to three areas of substantive
Union law: free movement of persons and services, and rights of establishment (Part 2,
Chapters 11–16); free movement of goods (Part 3, Chapters 17–18); and competition law
(Part 4, Chapters 19–22). In each of these three parts, judgments of the Court of Justice
and Court of First Instance (now renamed the General Court) have been extracted to

xvii
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