European Law - UU - Practice exam 2017-2018

Questions

Question 1

Quaglia is a big manufacturer of dry pastas and is based in Italy. Quaglia appoints local distributors to sell its product in each country. The market for pastas in Europe is very competitive so the distributors will only sell Quaglia's products if Quaglia agrees to grant them each an exclusive territory in which Quaglia will not supply any other distributors. In return, the distributors agree that they will not sell pastas made by competing manufacturers and that they will follow Quaglia’s advisory retail minimum price. To maintain their protection, the distributors have persuaded Quaglia to insert a standard clause on all distribution agreements, namely: that the distributors are not to sell in each other’s' territories, nor supply customers from each other’s' territories. Quaglia's market share is around 20% and each of its distributors have a market share of 15%.

Question 1a

Assess whether these agreements are compatible with EU law. Refer to the relevant provision(s) of EU law, and state your reasoning step by step. Also mention whether possible exceptions apply. (20 points)

Question 1b

What changes, if any, would you recommend to make to the agreements inorder for them to comply with EU law? (5 points)

Question 2 (15 points)

With the entry into force of the Lisbon Treaty the most significant deepening of the integration process occurred in the field of criminal law. Give your opinion on the following statement: “Police and judicial cooperation in criminal matters in Europe has become more supranational.” Provide one argument in favour of this position and one argument against it. Explain your answer.

Question 3 (15 points)

Tesla-Watt is the first electric car manufacturer in Europe. In 2009, when Tesla-Watt was established in Germany, there were no other firms selling e-cars in Europe (see table below). The commercial strategy of Tesla-Watt is to position the e-cars as a luxury alternative to the “regular” cars, so as to sell it at premium prices. Since 2010, the Swedish car manufacturer Volvy has introduced an alternative brand for e-cars to the European market, which are comparable in quality to the German e-cars. Volvy has adopted a different marketing strategy: it follows a mass-market approach, selling e-cars at low prices. Volvy is able to sell its e-cars at a price 25% lower than Tesla-Watt. The market shares of the two companies over the years in Europe have been as follows:

In 2010 demand forecasts at Tesla-Watt were significantly positively biased, implying that in 2011, the demand levels would significantly be exceeded. As the overly optimistic forecasts failed to meet their expectations, Tesla-Watt was left with an excess in stock in 2011. It decided to launch a special campaign in order to sell at below costs the stock of e-cars in excess. By virtue of this campaign, Tesla-Watt’s prices dropped considerably, even below the prices Volvy set for its e-cars. Is Tesla-Watt abusing its dominant position? Please explain your answer and assess all the relevant elements. Also refer to the relevant Treaty provisions and caselaw.

Question 4 (20 points)

TocMorris NV is a public limited company established in the Netherlands whose business includes the selling of medicinal products by mail order. By decision of 1 April 2014, the Spanish Ministry of Public Health granted TocMorrisa licence to operate a branch pharmacy in Madrid. The licence is however subject to a condition requiring TocMorris to recruit a pharmacist licenced by the competent Spanish authority who would be entrusted with managing the pharmacy located in Madrid personally and on his own responsibility. The Spanish authority points to the fact that in order to ensure a high level of health and human life protection in Spain they must govern the organisation of health services such as pharmacies. Allowing persons without a pharmacist licence to run a pharmacy would put the well-being and life of humans at risk. TocMorris disagrees with this decision of the Ministry and claims that EU law is breached.

Would the Court of Justice decide this case in favour of TocMorris or in favour of the Spanish authorities? In your answer refer to the relevant Treaty articles and caselaw. Note that the Services Directive does not apply to this case.

Question 5 (20 points)

Suppose Tim, a student in musical composition, who has the German nationality, studies in Hilversum (the Netherlands) were a famous school of music is established. Tim has been living in the Netherlands for two years, working as a barkeeper and a coach for a football team. He quits both the jobs in order to concentrate on his education and he request at DUO for a study allowance. Is it possible for Tim to be granted such an allowance based on EU law? In your answer refer to the relevant Treaty provisions, relevant secondary legislation and the caselaw.

Answers

Question 1a

Students need to investigate whether all the elements of Article 101(1) TFEU are satisfied:

1. Undertaking / Association of undertakings reference to Höffner; (1 points)
2. Type of multilateral conduct: agreement, concerted practice / decision; (4 points)
3. Appreciable restriction of competition; (object/effect) De minimis (6 points)
4. Effect on trade between Member States: Consten/Grundig (1 points)
5. Exemptions/Exceptions? (6 points) (+2 points for style and legal structure of the answer)

You may first apply Regulation 330/2010, then 101 (3) TFEU or the other way around.

Reg. 330/2010: art. 2/3: cap 30% market share for each, art. art. 4: non-severable hard core restrictions, art. 5: non-permissible, severable restrictions)

Restrictions:

• Exclusive supply as such is therefore allowed and is expressly mentioned in the Regulation (art. 4 b i)
• Advisory retail minimum price: allowed, art. 4a but there should be “no pressure or incentives” to effectively maintain a fixed minimum price
• Exclusively selling the Quaglia brand: not allowed, art. 5 (c) but not a hard core clause (so doesn’t void the contract)
•  “(T)hat the distributors are not to sell in each other’s' territories, nor supply customers from each other’s' territories”:Allowed, if restricted to active sales Article 4 (b)

Question 1b

1.  Advisory retail minimum price, but should be expressly mentioned that it is merely “advisory”
2.  Exclusive selling of Quaglia brand (art 5 (c)): not allowed, has to be scrapped.
3.  “(T)hat the distributors are not to sell in each other’s territories, nor supply customers from each other’s territories”: should be changed to: “(T)hat the distributors are not to sell actively in each other’s' territories(...) etc. (5 points)

Question 2

The answer shall strive to put in perspective the pre-Lisbon institutional EU framework of the Third Pillar with the post-Lisbon framework. In favor: (6 points) One may contend that the suppression of the pillar structure means that in the decision-making the ordinary legislative procedure is now the procedure ‘by default’. It is the normal procedure in art 82; 83; 84, 85; 87(1)(2) and 88 TFEU. Moreover, in the AFSJ and in other policy areas (ex. internal market) the powers of the institutions, in particular of the ECJ and of the Commission are now equal. Instruments used in order to regulate PJCC are the same as in other supranational areas: directives, regulations and decisions. They also have the same legal effects. References to the principle of mutual recognition (2001) and to the European Arrest Warrant (2002) and the case law relating to it (Melloni, Wolzenburg,...) are inadequate arguments since both institutions were already in place before the Treaty of Lisbon entered in force in 2010. The same goes for references to Eurojust or Europol that are bodies of the Union which have been created before 2010. Against: (7 points) By contrast, several aspects of police and judicial cooperation in criminal matters remain very much intergovernmental. For example, unanimity is still necessary in order to decide on the creation of an EPPO or on family law. To a certain extent one may also contend that the existence of an emergency break in order to stop the OLP when a draft directive on the harmonization of criminal law affects one of the fundamental aspects of the criminal justice of a member state is an intergovernmental feature. It may be contended that such a mechanism boils down to circumvent the OLP and reintroduce the veto of unanimity. Another example consists in relying on article 9 of Protocol 36 according to which third pillar law keeps its ‘intergovernmental’ legal effects until it is amended, repealed or annulled. Therefore, a framework decision cannot entail direct effect. References to the principle of mutual recognition (2001) and to the European Arrest Warrant (2002) and the case law relating to it (Melloni, Wolzenburg,...) are inadequate arguments since both institutions were already in place before the Treaty of Lisbon entered in force in 2010. The same goes for references to Eurojust or Europol that are bodies of the Union which have been created before 2010. (+2 points for style and legal structure of the answer)

Question 3

1. Undertaking? The cars manufactures are undertakings> Höffner “Every entity engaged in an economic activity, regardless of its legal status and the way in which it is financed”. They offer e-cars on the European market
2. Dominant position? “‘A position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers”. United Brands, para 65. Definition of the relevant market (United Brands) Product market is e-cars. It is possible to argue that the relevant market is just “cars”. However, according to the information provided, it appears more appropriate to refer to e-cars market. Geographic market is Europe. No other indicators mentioned, however you can argue that there are high barrier to entry and very hish sunk costs. With a market share of 60% dominance is presumed.
3. What kind of abuse is this?  This conduct does not amount to an abuse. There is a commercial justification behind selling below cost, that is the intention to get rid of the e-cars in excess. This is allowed because it is considered to be “competition on the merits” (Protection of commercial interests: Case 27/76, United Brands v Commission)
4. Impact on trade between MS> an actual/potential impact on the pattern of trade between MS
5. The strategy of Tesla-Watt does not infringe Article 102 TTEU.

Question 4

Necessary elements of the answer:

• The case falls under the freedom of establishment: Art. 49 TFEU (1 points) and the right to second establishment such agencies, branches or subsidiaries. For the delineation between the freedom of establishment and the free movement of services see case Gebhard. (1 point)
• Art. 49 TFEU says that restrictions on the freedom of establishment shall be prohibited. (0,5 point)
• A cross-border element (a branch of Dutch company in Spain) and genuine economic activity are clearly present in the case which means that the rules of the internal market apply. (0,5 point)
• The Spanish requirement is indistinctly applicable but it constitutes an obstacle to the exercising the freedom of establishment by the Dutch company. It is a non- discriminatory measure but it constitutes a hindrance to the market access, see case Gebhard. (5 points)
• However, the measure could be justified by the reason of protecting health and life of humans on basis of Art. 52 TFEU (express Treaty derogations) and the mandatory requirements / rule of reason (RoR) justifications – the latter to be found in the Gebhard case.
• In order to be justified the national measure must be proportionate, i.e. it must be suitable and must not go beyond of what is necessary to achieve the objectives of legislation at hand. One could argue that the measure is suitable to achieve the objective sought. The measure also does not seem too excessive (student can choose to argue to the contrary) which implies that it is proportionate. Student should argue why the measure is/isn’t proportionate. (5 points)
• Conclusion: the Spanish measure is very likely allowed under EU law. The case would then be decided in favour of Spain. (1 point) Note: a limited number of points was given if a student argued that the case concerns the free movement of services but he/she went through the steps of application of Art. 56 TFEU. (+2 points for style and legal structure of the answer)

Question 5

Tim is a German national, therefore he is a EU citizen (Article 20 TFEU). (2 points) He used to be a worker and based on that qualification he should be granted a study allowance (Article 45 TFEU). (3 points) However, since he quit working he can only rely on his free movement rights as a EU citizen (Article 21 (1) TFEU). (2 points) In principal Tim should be treated equally with regard to social allowances in the host MS (Martinez Sala). > This case is not in the reader. (3 points) However, Article 24 (2) of 2004/38 explicitly excludes the grant for study allowances if a student stays shorter than 5 year on the territory of the host MS (Article 24 (2) and 16 of Directive 2004/38). The CJEU held in the case of Förster that a five years residence requirement is indeed appropriate in order to measure the degree of integration. (8 points) (+2 points for style and legal structure of the answer)