LEGAL RESEARCH PAPER SERIES Paper No 15/2012 April 2012

Subsidiarity, a Political and Legal Analysis

PAUL P. CRAIG

(2012) 50 Journal of Common Market Studies 72

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Subsidiarity, a Political and Legal Analysis

PAUL CRAIG

St John’s College, Oxford

Introduction

Subsidiarity may well have been the word that saved the Maastricht Treaty (Cass,

1992), but the topic has remained emotive ever since. This article considers

subsidiarity from a political and a legal perspective. The discussion begins with the

historical rationales for inclusion of the subsidiarity principle in the Maastricht Treaty.

This is followed by consideration of the five principal challenges to realization of the

subsidiarity principle. The third part of the paper analyses the classic legal

perspective, which is premised on the assumption that the EU courts do not take

subsidiarity sufficiently seriously, a problem that would be obviated through more

intensive judicial review. The limitations of this thesis are explored. The final section

of the paper examines a more radical legal critique, the argument being that

subsidiarity should either be replaced or supplemented by a principle that would

enable the EU courts to monitor via proportionality the extent to which EU action

unduly intrudes on Member State values/autonomy. The legal, political and normative

difficulties with this suggestion are explored in the final section of the paper.

I Historical Rationales

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It is important at the outset to reflect on the rationales for inclusion of subsidiarity

within the Maastricht Treaty. The broader historical foundations for subsidiarity have

been discussed elsewhere (Barber, 2005). We can discern a number of rationales for

subsidiarity within the EU.

First and foremost was the perceived role of subsidiarity as a mechanism for

alleviating disputes concerning the division of competence between the EC and the

Member States. Prior to the Lisbon Treaty there was no discrete body of Treaty

provisions that explicated clearly the different types of Community competence.

Different types of EC power could be discerned in different areas (Dashwood, 1996;

von Bogdandy and Bast, 2002; Schutze, 2006), but this did little to assuage Member

State concerns. The very absence of an explicit Treaty schema, combined with the

broad interpretation given to Articles 114 and 308 EC, gave rise to Member State

concerns about the expansion of EC power to the detriment of states’ rights, (Pollack,

1994). The picture was further complicated by inter-institutional battles over the

correct Treaty provision to be used for EU legislation in particular areas, the key

being the degree of participation and voting rights afforded to the institutional players,

(Bradley, 2011). Subsidiarity was perceived as a way of alleviating the competence

problem. The taxonomy of EC competence was still unclear post-Maastricht, but it

was felt that subsidiarity would help prevent excessive use of power by Brussels. The

‘S’ word in the Maastricht Treaty was thus important in allaying fears about the ‘F’

word, federalism. The same theme is apparent in the Lisbon Treaty, with

reinforcement of subsidiarity seen as a way to bolster the division of competence.

Secondly, subsidiarity had an important normative dimension. The divide

between shared and exclusive power was elusive and contested pre-Lisbon. This

should not conceal the relative novelty of subsidiarity as a device for distinguishing

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between ‘federal’ and ‘state’ power. The assignment of subject matter areas to

respective spheres of government, a classic mode of federal divide, was

complemented by subsidiarity. The message was that in areas where it was difficult to

decide with exactitude the limits of federal power, subsidiarity would be used as part

of the criterion, (Bermann, 2009). This was further emphasized and reinforced by the

wording of subsidiarity: if the desired objective could be ‘sufficiently’ achieved at

Member State level, it was incumbent on the EC to show that it could be ‘better’

achieved at Community level.

A third and distinctive rationale for subsidiarity was the desire to avoid

excessive centralization. Whether the fear was real or imagined, important ‘players’

perceived the EU as becoming too centralized. Some national governments in the late

1980s and 1990s were ‘new conservatives’, intent on redefining the boundaries of the

state. At the same time new areas of competence were assigned to the EU and existing

areas were expanded through Treaty amendment or judicial interpretation. The EU

was only just discovering the new mode of harmonization, such that most regulatory

initiatives were detailed and intrusive. Small wonder then that there was concern

about centralization in the broadest sense of that term, and little surprise that

subsidiarity was seen as one way of addressing the problem.

Finally, there was a further normative rationale for subsidiarity: it was

perceived as a way of enhancing pluralism and the diversity of national values. The

very idea that if an EC objective could be sufficiently achieved at national level then

this should be the regulatory route, meant not only that the task was undertaken

locally, thereby avoiding excessive centralization, but also that it could be achieved in

the way that best accorded with Member State values, provided that the Community

objective was duly attained. The 1980s and 1990s saw an upsurge in literature

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questioning the EU’s legitimacy. Scholars explored the potential for differentiated

integration, thereby avoiding unwarranted uniformity, (de Búrca and Scott, 2000;

Tuytschaever, 1999). Subsidiarity provided one ‘space’ in which this diversity of

national values could flourish.

II Difficulties with Realization

The balance between centralization and decentralization is endemic to any polity in

which power is divided between levels of government, (Coglianese and Nicolaidis,

2001; Kelemen, 2004). How to ensure that the division of power between the

respective levels of government is respected is an equally endemic problem, (Young,

2002). Subsidiarity was intended to aid resolution of such issues within the EU. The

effluxion of time has however revealed the difficulties with realization of these

objectives. Five such difficulties will be explored here.

Applicability of Subsidiarity pre-Lisbon

There was a paradox in the post-Maastricht world that was readily foreseeable, albeit

problematic nonetheless. The subsidiarity calculus was applicable in areas that did not

fall within the Community’s exclusive competence. The subsidiarity concept that was

intended to alleviate competence disputes between the EC and the Member States was

therefore predicated on the meaning of exclusive competence, for which the

Maastricht Treaty provided no ready definition.

This naturally led to diverse interpretation of this term. The Commission took

the view that an area fell within exclusive competence if the Treaties imposed a duty

to act (European Commission, 1994). This elastic criterion was interpreted broadly to

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include the four freedoms, the Common Commercial Policy, competition, agriculture,

fisheries and transport policy. It might seem over expansive to include the four

freedoms within the sphere of exclusive competence, and so it is. The four freedoms

were however assigned to exclusive competence until late in the drafting of the

Constitutional Treaty, when they were shifted to shared competence. The fact remains

that until the Lisbon Treaty provided a list of exclusive competences, there was

inevitably room for disagreement as to the meaning of that term. (Toth, 1994; Steiner,

1994).

It would be wrong to suggest that the Commission stuck rigidly to the very

wide reading of exclusive competence, such as to exclude all consideration of

subsidiarity across a broad terrain of Community policy. The impact of Article 5 EC

was evident in relation to the existence and form of Community action. The

Commission considered whether action was required at Community level, and its

reasoning was included in the recitals or explanatory memorandum, (European

Commission, 2000). The uncertainty as to the meaning of exclusive competence

nonetheless cast a shadow over subsidiarity in the pre-Lisbon era.

Applicability of Subsidiarity post-Lisbon

We have already seen that a principal rationale for subsidiarity was that it would

alleviate the competence problem. The ‘S’ word in the Maastricht Treaty was thus

used to allay fears about the ‘F’ word, federalism. The same theme is apparent in the

Lisbon Treaty, with reinforcement of subsidiarity seen as a way to bolster the division

of competence, more especially given that the taxonomy of competence had become

clearer because of the Lisbon schema. There are however difficulties with this in the

post-Lisbon world.

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The scope of EU competence is determined in significant part by Member

State decisions during Treaty amendment as to the subject matter over which the EU

should have competence and the type of competence that it is accorded. This is not

however the whole story. The scope of EU competence is also affected by the

interpretation accorded to Treaty provisions by the EU courts, and there is little

evidence to suggest that the EU courts take systematic cognizance of subsidiarity

when making this determination.

There is moreover a less obvious difficulty, even in relation to competence

issues that are the result of Member State choice as expressed through successive

Treaty amendment. This is in part because of the difficulties with the application of

the subsidiarity calculus, discussed below. It is however also in part because the

implicit assumption is that subsidiarity can be ‘bolted on’ to the grant of any

competence with equal ease, so as to condition the exercise of EU power. This may be

true in formal terms, it is indeed the schema of the Lisbon Treaty in areas other than

exclusive competence. The reality in substantive terms is more complex.

Thus, for example, there were a plethora of reasons for according the EU

competence over social policy broadly defined, a prominent rationale being the need

to remedy the imbalance between the ‘economic’ and the ‘social’ within the Treaty. It

is however more difficult to apply precepts of comparative efficiency that underpin

subsidiarity to heads of competence that are social rather than economic. The very

meaning of the key phrases in Article 5(3) TEU, that the ‘objectives of the proposed

action cannot be sufficiently achieved by the Member States’ and that the ‘scale and

effects of the action’ require EU intervention, is more contestable when applied to the

social sphere.

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Application of Subsidiarity

This naturally leads to the third problem, which is application of the subsidiarity

criterion judged in terms of comparative efficiency and proportionality, (Estella,

2002). Subsidiarity might mean either that the entirety of an EU objective could be

sufficiently achieved at Member State level, or that aspects such as enforcement,

oversight etc, met this criterion. The latter was more common than the former.

If the EU decided to pursue a subsidiarity strategy it had choices as to how to

do so: it might simply leave certain aspects of the regulatory regime to be dealt with at

national level; it might specify EU rules to govern all aspects of the regulatory

schema, but do so at a relatively high level of generality, thereby leaving more scope

for national input and variation; or it might pursue an admixture of both strategies.

Lighter touch intervention through directives rather regulations has been designed to

foster subsidiarity, and the EU Courts regard directives as indicative of subsidiarity in

terms of means of implementation, (T-263/07, T-374/04).

This approach is however predicated on the feasibility of the divide between

different aspects of a regulatory scheme, some regulated at EU level, others being left

to subsidiarity-based national rules. This might be the optimal way to regulate the

area. We cannot however assume that this is so. We, commentators, bear some

responsibility in this regard. We wish to be able to criticize EU policies where they

are inefficacious or badly designed. We wish also to be able criticize the EU for not

taking subsidiarity seriously. There may well be circumstances in which it is coherent

to maintain both positions.

There are, however, significant instances where the impulses cannot be

reconciled. The reality is in many areas, such as telecommunications, energy,

agriculture, the structural funds and financial services regulation that the desire to

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foster subsidiarity, either by leaving certain aspects of the regulatory regime to

national rules, or through EU rules that govern the issues but are set at a high level of

generality so as to allow for national choice, have led to regulatory failure, with the

consequence that the rules have had to be revised and the level of EU control

ratcheted-up.

The de Larosiere Report on failures in the regulatory regime concerning

financial supervision provides merely one high profile example of this (de Larosiere,

2009, paras. 102-105). The report noted the lack of cohesiveness in EU policy, and

concluded that the principal cause stemmed from the options provided to Member

States in the enforcement of directives, which was itself the result of the discretion left

to Member States by the primary directives that governed the area. The excessive

diversity was manifest in, for example, different meanings given to ‘core capital’,

differing degrees of sectoral supervision, diverse reporting obligations, distinct

accounting provisions in areas such as pensions, and highly divergent national

transposition.

While the precise form of this regulatory failure differs in different areas, a

pattern or pathology can nonetheless be detected, (Craig, 2006). It begins with the

primary regulation, which embodies the political choices that shape the regulatory

schema. This may leave significant discretion to the Member States through

subsidiarity in the ways adumbrated above. Thus the legislation may be cast in

discretionary terms with room for national manoeuvre, and/or the enforcement regime

may be left to Member States. Problems with the application of the primary regulation

become apparent, often because of the very substantive or enforcement discretion left

to the Member States. This in turn leads to Comitology regulations, which seek to

remedy the malaise revealed in the primary regulation. The Commission is aided by

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the ECJ, which takes a teleological interpretation of the primary regulation in order to

plug gaps. After a period of time the primary regulation is replaced. The new primary

regulation embodies lessons learned from the previous regime. Control and oversight

are ratcheted up. The new primary regulation is nonetheless shaped by the prevailing

political realities. These may dictate a shift in direction, such as from price to income

support for farmers. This legislation may be predicated on subsidiarity in substantive

and/or enforcement terms, and secondary Comitology norms combined with judicial

intervention may once again be required to close gaps revealed in the new schema.

The stages in this cycle can now be exemplified more fully in relation to the

structural funds. The primary regulation contains the political choices that shape the

policy area, (Sutcliffe, 2000). Law creates incentives or disincentives to certain types

of action. The legislation contains, for example, procedural and substantive conditions

for eligibility to funds. It specifies rules as to liability if things go wrong. The design

of the legislation is crucially important to the overall efficacy of the regime.

There is a tension in the framing of this legislation between the collective

interests of the Member States in the Council, and the interests of individual Member

States as recipients of regional funds. The Member States in their collective capacity

have an interest in the correct allocation of the EU budget. There is however a strain

between this objective, and accountability of individual Member States for the correct

disbursement of funds. Individual states sought to minimize their liability for incorrect

regional fund allocations, and this was reflected in the content of the legislation and in

the way it was applied (Committee of Independent Experts, 1999).

Thus, for example, the successive primary regulations on the structural funds

embodied commitments to concentration, additionality, partnership and programming

as ideals that shaped the collective interest in EU regional policy. The legislation

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accorded the individual Member States significant discretion concerning the

application of these ideals in the context of project selection. The collective interest

required the proper deployment of Union resources to attain EU regional policy. This

required machinery to ensure that projects were properly monitored, and that there

was effective machinery to detect financial irregularity through audit and the like.

Individual Member States had however an incentive to avoid these constraints, more

especially where the consequences could be financial penalties imposed on the state.

This was all the more significant given that the strategy in the 1999 regulations was to

devolve more responsibility for project monitoring on the Member States, since the

Commission did not possess the resources to do the job. It was then all the more

important that the legislative rules casting the Member State as gamekeeper did not

allow it to become poacher or to turn a blind eye to poaching by others.

The tension between the collective Community interest and that of individual

Member States was particularly prevalent in relation to the output stage, in relation to

matters such as payment, monitoring, audit and the like. (Craig, 2006). There had to

be effective control systems over the disbursement of funds at national level. The

Commission sought to close the gaps through Comitology regulations, and to

incorporate these provisions in the next round of primary regulations. It was aided by

the EU courts, which made significant contributions to ensuring the efficacy of the

regulatory regime (C-271/01, C-383/06).

The importance of the cycle described above is reflected in changes to the

Financial Regulation, which contains the overarching rules applicable to the discharge

of EU policy. It was revised in 2002 in the wake of the resignation of the Santer

Commission and embodies principles concerning direct and shared administration

(Council Regulation, 2002). The 2002 Regulation was amended in 2006 and these

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changes together with others will be enshrined in the 2012 Financial Regulation

(European Commission, 2010). Space precludes detailed consideration of these

amendments. Suffice it to say for the present that the draft Financial Regulation 2012

is designed to strengthen the controls on national bodies that implement EU policy by

establishing more detailed rules concerning matters such as sound financial

management, transparency, non-discrimination, internal control systems, accounting

systems, and external audit. Experience with the 2002 Regulation revealed

weaknesses in these respects, and the inclusion of such rules in the draft 2012

Regulation means that they will bind Member States irrespective of whether such

rules are replicated in sector specific regulations.

Taking Subsidiarity Seriously

In addition to the difficulties with the application of subsidiarity charted above there

has been concern that subsidiarity is not taken sufficiently seriously. There is little

doubt that in the early years the Commission’s reasoning concerning subsidiarity was

often exiguous. The Lisbon Treaty revisions whereby greater power has been given to

national parliaments is relevant in this respect, since the Commission’s reasoning will

be subject to greater and more routine scrutiny than hitherto. There have also been

other improvements.

Impact Assessment is important in this context. It began in earnest in the new

millennium (European Commission, 2002, 2007) and developed significantly since

then (European Commission, 2009). Impact assessment is a set of steps to be followed

when policy proposals are prepared, alerting political decision-makers to the

advantages and disadvantages of policy options by assessing their potential impacts.

The results of this process are presented in an Impact Assessment Report.

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A typical Impact Assessment will address a range of issues including: the

nature and scale of the problem, how it is evolving, and who is most affected by it; the

views of the stakeholders concerned; should the Union be involved; if so, what

objectives should it set to address the problem; the main policy options for reaching

these objectives; the likely economic, social and environmental impacts of those

options; a comparison of the main options in terms of effectiveness, efficiency and

coherence in solving the problems; and the organization of future monitoring.

The Impact Assessment Report considers the very issues that are pertinent to

our inquiry. This includes the justification for EU action in terms of the need for

harmonization, and the subsidiarity calculus, which is an explicit step in the overall

Impact Assessment process. If the data in an Impact Assessment Report is felt to be

wanting in these respects, then we should press for improvement and not be satisfied

with exiguous or laconic argument. The very fact that there is a framework within

which these issues are considered is however a positive step, which facilitates scrutiny

as to the nature of the justificatory arguments and their adequacy.

This should in turn facilitate judicial review. The ECJ should be willing to

consider the adequacy of the reasoning for EU legislative action, and to look behind

the formal legislative preamble to the arguments that underpin it derived from the

Impact Assessment. It has recently made reference, albeit cautiously, to the Impact

Assessment (C-58/04). The ECJ should be mindful of the Commission’s expertise as

evinced in the Impact Assessment. It should also be cognizant of the precepts in the

Treaty, which in the case of Article 114 TFEU condition EU intervention on proof

that approximation of laws is necessary for the functioning of the internal market. If

the justificatory reasoning to this effect in the Impact Assessment is wanting then the

ECJ should invalidate the relevant instrument, and thereby signal to the political

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institutions that the Treaty precepts are taken seriously. This is equally the case in

relation to subsidiarity. If the verification or justification for EU action contained in

the Impact Assessment appear merely formal, scant or exiguous then the ECJ should

not hesitate to so conclude, thereby indicating that the enhanced role accorded to

subsidiarity in the Lisbon Treaty will be taken seriously.

There is little doubt that the Commission often believes that action at EU level

in an EU of twenty seven Member States is the only realistic way to get the job done.

The reality is, in many instances, that it is correct, more especially given the earlier

point concerning the danger of regulatory failure resulting from subsidiarity-driven

national room for manoeuvre. It should however be recognized that although the

Commission may believe that action at EU level is required, it has been willing to

craft legislation so as to meet subsidiarity concerns. The allegation is sometimes made

that the Commission will always seek harmonization, the implication being that this is

most intrusive on Member State autonomy. The assumption that EU intervention

through harmonization is necessarily more intrusive than, for example, mutual

recognition, is however mistaken, since whether it depends on the degree of

harmonization.

The recent evidence of the post-Lisbon rules indicates, moreover, that the

Commission will listen to concerns from national parliaments, even where the number

expressing such concerns has not reached the formal trigger required by the Protocol,

(European Commission, 2011). Thus during 2010 the Commission sent 82 draft

legislative acts to national parliaments for subsidiarity scrutiny, and received 211

opinions, of which 15% raised subsidiarity concerns. The number of opinions from

national parliaments on a particular draft legislative act never came close to triggering

the yellow and red card mechanisms under the Protocol on Subsidiarity. The

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Commission nonetheless replied to each of the opinions within the broader context of

the political dialogue that it engages in with national parliaments on policy proposals.

The Commission has in addition made clear that while subsidiarity controls only

apply to draft legislative acts, it will also consider opinions of national parliaments on

other acts within the framework of the political dialogue.

Subsidiarity and Private Actors

The final tension in the application of subsidiarity is different from those considered

thus far, but equally important. The preceding discussion has focused on national

actors and institutional players. We have said little about the perceptions of private

actors. The ‘uncomfortable’ fact is that many private actors regard such national

diversity negatively, because of the increased costs and uncertainty that flows from

subsidiarity.

It can be accepted that there might be situations in which private actors benefit

from diversity in the regulatory package that flows from subsidiarity. There will

however be many instances where this is not so, especially for those businesses faced

with regulatory health and safety regimes, or seeking to break down market barriers to

entry.

Each business will have its own first order preference as to the content of the

regulatory provisions for its area. Its second order preference will often be for some

real measure of certainty as to what the regulatory demands actually are, even if the

content of the measure does not meet its first order preference. It may indeed be the

case that a business faced with the choice between its first order preference applied

with a relatively high element of national variation through subsidiarity, would in fact

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prefer its second order preference applied with a regime of greater regulatory certainty

and less subsidiarity.

Consider the preceding in the light of, for example, EU rules concerning the

regulation of the pharmaceutical sector, including the safety regime for the running of

clinical trials (Directive 2001/20). The companies undertaking such work may have

their own first order preference as to the content of the regulatory regime. They will

however also place a very high premium on certainty, on the fact that the clinical

trials run in one country really cohere with those in another, since otherwise costs

inexorably rise and there is attendant uncertainty as to what really constitutes good

clinical practice. This certainty can be undermined by subsidiarity if that takes the

form of leaving certain parts of the regulatory schema to the Member States. It can

also be undermined if subsidiarity is manifest in the form of EU rules that cover the

entire area, but are drafted so as to leave considerable discretion to the Member States

in relation to certain aspects of the regulatory regime.

Consider once again a firm seeking to break into energy markets, gas or

electricity. It will have its first order preferences as to what a regime of open energy

markets should look like and how it should be structured. It will however also place a

high premium on certainty as to what the rules are, whatsoever their content, and a

high premium on the fair application of those rules by national players in the Member

States. The latter is especially important. If the relevant regulatory package allows too

much latitude to the national players, either because the relevant rules are

insufficiently rigorous and/or because there is national latitude through subsidiarity,

then there is a danger, in some countries at least, that the regulatory schema will not

be properly applied, and that costs, direct and indirect, to business will increase

(European Commission, 2007A).

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This private dimension to the subsidiarity debate is important in economic

terms. It also sheds light on the normative aspect of subsidiarity. We saw that part of

the subsidiarity rationale was the fostering of national diversity, and preservation of

pluralism. This is predicated on attachment to those national values, not only by those

wielding governmental power, but also by the ‘people’.

The preceding discussion reveals that attachment to the national values that

provides the foundation for subsidiarity might not be as ‘firm’ or ‘embedded’ as many

would like to think. It also reveals something subtly different. The benefits of

subsidiarity are equally applicable to all Member States. The private dimension of the

discussion shows, however, that whatsoever a particular private player might feel

about its own national rules, if the consequence of attachment to those rules through

subsidiarity brings uncertainty and increased costs because all other Member States

can evince a similar attachment to their national rules, then the private player will

often be sceptical as to the resultant outcome.

III Increased Intensity of Judicial Review

The standard legal response to the difficulties with subsidiarity is to argue that the EU

courts do not take subsidiarity seriously, and that this malaise would be overcome if

they increased the intensity of judicial review. Legal academics have criticized, with

justification, the low intensity judicial review of subsidiarity by EU courts (Wyatt and

Dashwood, 2006).

This critique is premised on there being a ‘legal problem’, but there is little

analysis as to how many subsidiarity cases have been brought since its introduction in

the Maastricht Treaty, and little detailed thought as to whether the results in the cases

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were correct, or whether they would have been any different if the ECJ had engaged

in more searching judicial review.

The ‘numbers’ issue reveals an interesting picture. The reality is that there

have been few subsidiarity challenges since its introduction into the Treaty, less than

twenty, which means roughly one per year. The real figure is lower, since some cases

duplicate earlier challenges; in other cases the challenge was clearly misplaced given

the relevant Treaty provisions or EU regulatory scheme; while in yet others the

Member State adduced no evidence to substantiate the subsidiarity argument. This

leaves just over ten cases in nearly twenty years where has been a real subsidiarity

challenge, (Craig and de Búrca, 2011). There have been many thousands of

regulations, directives and decisions during this period, with just over ten subject to

legal challenge. The existence of ten real subsidiarity cases in twenty years is relevant

in assessing the extent of the legal subsidiarity problem.

We can now turn to the related issue, which is whether the ECJ reached the

correct result in these cases, and whether the result would have been any different if

the Court had engaged in more searching scrutiny. This is clearly an exercise on

which opinions can differ. It is nonetheless central to evaluation of the judicial record.

There is little point conducting an analysis on the implicit premise that the ECJ ‘got it

wrong’ without undertaking the inquiry required to sustain such a premise. In

assessing the judicial record it is important to recognize that in a number of the ‘real’

cases the subsidiarity challenge was opposed by other Member States, who argued

that the contested EU legislation was consistent with the subsidiarity principle. Any

idea that Member States take a uniform view concerning the application of

subsidiarity in a particular case is therefore untenable. It should also be recognized

that some subsidiarity challenges were brought by private parties and received no

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support from any Member State. This does not mean that such challenges were

misplaced. It does mean that no Member State supported the claim that the relevant

EU legislation infringed subsidiarity, (Craig and de Búrca, 2011).

It is not self-evident that any of the existing cases should have been decided

differently on the facts. Nor is it obvious that any of the real subsidiarity cases would

have been decided differently if judicial review had been more intensive. It is too easy

to reason from the premise that judicial review ‘should’ be more searching, to the

conclusion that the result ‘would’ have been different. The premise is correct, the

conclusion is wrong. The result might be different, it might not. Thus even where the

reasoning of the Advocate General was considerably more searching than that of the

Court, as exemplified by Advocate General Maduro’s Opinion in Vodafone (C-58/04)

the result was the same. The reality is that whether a particular judicial decision was

right or wrong can only be determined by looking closely at the contested regulatory

scheme and deciding whether it ‘passed’ the subsidiarity criterion. When judged from

this perspective it is not self-evident that any of the challenged regulations should

have fallen because of subsidiarity.

It is no answer to the preceding argument concerning the paucity of

subsidiarity challenges that it is explicable simply because of the limited intensity of

review. This will not withstand scrutiny. More intensive review may, other things

being equal, encourage judicial claims. It is nonetheless the case that the figure of

approximately ten real subsidiarity legal challenges over a twenty year period is very

low, more especially when contrasted with claims based on other heads of judicial

review. The fact that it is, for example, difficult to succeed in a proportionality claim

against EU action has not deterred claimants from bringing such actions. To put the

subsidiarity figure in perspective, there will often be more than ten legal challenges in

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a month based on grounds of judicial review such as proportionality, notwithstanding

the difficulties of securing a positive result.

A more realistic political explanation for the relative paucity of challenges,

and the weakness of the challenges actually made, almost certainly resides elsewhere.

A Member State that raises a subsidiarity claim in a legal action will, by definition, be

faced with a recently enacted EU regulation, directive or decision. The very fact of its

enactment attests to the fact that sufficient Member States to secure a qualified

majority believed that action at EU level was required in accordance with the

subsidiarity calculus. A Member State minded to make subsidiarity a principal

element of its legal action will therefore know that its claim is almost certain to be

opposed by legal interventions from other Member States, who will contend that

action at EU level was warranted.

IV Competence-based Proportionality Review

The difficulties with legal control over subsidiarity have led some to argue that the

subsidiarity inquiry is misplaced. Thus Davies (2006) has contended that the focus

should rather be on whether the challenged EU legislation is disproportionate by

intruding too far into Member State values in relation to the objective sought to be

attained by the EU. He argues that insofar as there are problems with delimitation of

competence, subsidiarity is ill-suited to providing meaningful demarcation: it is the

wrong rule, in the wrong place at the wrong time (Davies, 2006, p. 66). Davies

contends that the central flaw is that ‘instead of providing a method to balance

between Member State and Community interests, which is what is needed, it assumes

the Community goals, privileges their achievement absolutely, and simply asks who

should be the one to do the implementing work’, (Davies, 2006, pp. 67-8). He is

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similarly sceptical of the application of subsidiarity by the Commission in the pre-

legislative process. (Davies, 2006, p. 76). The remedy for this malaise is

proportionality. The ECJ should consider whether the importance of an EU measure is

sufficient to justify its effect on the Member States (Davies, 2006, p. 83). It should

‘spell out the competence function of proportionality, and the role of national

autonomy in the balance, and have a go at addressing competence concerns in this

way’ (Davies, 2006, p. 83). The focus should therefore be on whether the EU norm

violates proportionality by infringing too greatly on Member State values. There is

much that is of interest in this thoughtful analysis. The approach is nonetheless

problematic for the following reasons.

First, the analysis underplays the extent to which the existing Treaty schema

already balances Member State and EU interests. The division between Member State

and EU power is addressed in the heads of competence in Articles 4-5 TEU, and

Articles 2-6 TFEU. The very division between the categories of exclusive, shared and

supporting/coordinating/supplementing competence encapsulates a view as to the

respective EU and Member State interests. These choices were made after ten years of

discursive Treaty reform. Thus the denomination of certain interests as falling within

exclusive competence reflects a considered determination that in such areas the

Member States should have no legislative capacity, given the centrality of such

matters for the functioning of the EU. The concept of shared competence is predicated

on the assumption that Member States should retain competence, at least until the EU

had exercised its competence in the relevant area. The nature of the power sharing

differs as between these areas, as acknowledged by Article 2(6) TFEU. This very

diversity is a reflection of the Treaty framers’ views as to where the balance between

national autonomy and EU competence should lie in relation to each such subject

21

matter. In those areas where the EU only has power to support, coordinate and

supplement Member State action national autonomy is accorded a higher premium, as

reflected in the greater limits on EU action and the preclusion of harmonization.

Secondly, Davies’ argument misses the reality of EU decision-making. It is

predicated on subsidiarity operating such that ‘it assumes the Community goals,

privileges their achievement absolutely, and simply asks who should be the one to do

the implementing work’ (Davies, 2006, p. 67), thereby precluding any balance

between EU and Member State interests, which is what Davies believes is required

(Davies, 2006, pp. 67-8). This fails to take account of the way in which the EU

‘objective’ is fashioned. The EU ‘objective’ will be determined by the interplay of

political forces that shapes particular legislative initiatives in the light of the Treaty

provisions. There will be discussion as to whether the EU should act and if so how it

should it do so. These discussions will involve issues concerning the form, content

and nature of the proposed measure. Discourse on Commission proposals with the EP

and the Council will therefore take cognizance of what the Member States are willing

to accept in terms of impact on their national values and autonomy, and this will be

embodied in the resulting EU ‘objective’.

Thirdly, there are difficulties concerning the legitimacy of the role accorded to

proportionality. Proportionality fulfils an independent competence role within the

Davies schema, whereby the EU courts would determine whether the importance of

an EU measure justified its effect on the Member States (Davies, 2006, p. 83). This is

markedly different from use of proportionality within Article 5(3) TEU as part of the

subsidiarity calculus. The schema of proportionality in Article 5(3) and the Lisbon

Protocol are not framed in terms of the kind of free-standing competence-based

proportionality analysis. Nor is there any suggestion of such use of proportionality in

22

the discussions that led to the Constitutional or Lisbon Treaties. Thus Davies’

conception of proportionality is premised on proportionality as a general principle of

law modified to bear the competence meaning he ascribes to it. This is problematic.

The Lisbon Treaty was the culmination of ten years of Treaty reform, with no hint of

the kind of competence-based proportionality advocated by Davies. The suggestion is

that this should nonetheless be used to supplement existing Treaty controls. There are

already concerns voiced about over-extensive use of general principles of law

(Weatherill, 2004). We should therefore be wary of introducing a novel form of

proportionality control, which is not part of the Treaty schema.

Fourthly, there are significant difficulties of adjudication. The EU courts

should on Davies’ view adjudicate as to whether the incursion on Member State

values is disproportionate in the light of the EU objective. This inquiry is more

difficult than other kinds of proportionality analysis. Davies’ approach would allow a

Member State to argue that EU legislation should be struck down as disproportionate,

because it entailed too great an intrusion on Member State values. However, the very

fact that the legislation was enacted by what would normally be qualified majority

indicates that the majority of Member States do not feel that the legislation entails too

great an incursion on national values. The representatives in the Council are the

guardians of Member State values. It would be prima facie odd and paternalistic for a

Court to say to Member States that have voted in favour of a measure and therefore do

not believe that it entails too great an incursion on Member State values/autonomy,

that the measure is nonetheless disproportionate in this regard. The fact that there is

one Member State in the political minority means that the ECJ would have to balance

not merely the EU objective versus incursion on Member State values, but also the

very fact that most Member States do not agree with the applicant state. The EU is

23

premised on collective action in which Member States have to make compromises.

Thus the mere fact that a Member State honestly believes that the legislation on which

it was outvoted in the Council involves too great an intrusion on its values, does not

ipso facto mean that this ‘entitles’ it to win the legal action, nor that it should

‘privilege’ its vision of the balance between EU objectives and Member State values

over those of other Member States.

The penultimate difficulty with Davies’ suggestion is that it is not clear that

there is a real problem to be addressed. There is no doubt that some may feel that the

EU is ‘doing too much’ or ‘going too far’. Such concerns have been endemic in EU

discourse since the Community was created. This does not however make the case for

the proportionality control that Davies advocates. It would have to be shown that there

were occasions on which such a control would have made a difference. Davies

grounds the justification for such control largely on hypothetical examples of what the

EU might do (Davies, 2006, pp. 68-9). It is, however, dangerous to fashion new legal

doctrine on the basis of hypothetical examples, more especially if one reflects on the

real world examples that we have to hand. Thus it is difficult to regard any of the

actual subsidiarity cases as ones that should have been struck down via this novel

form of proportionality competence-control. The issue is not whether a commentator

likes the particular EU regulatory provision, but whether the contested measures could

seriously have been regarded as instances where the EU legislation was

disproportionate because it involved too great an intrusion on Member State

values/autonomy etc. It is difficult to think of any instances from the real world

subsidiarity cases that would seriously be regarded as infirm in this respect.

The final difficulty with this form of proportionality analysis is that it would

be of very limited efficacy. Let us assume, contrary to the above, that there are

24

significant instances in which a competence-based form of proportionality control

would have made a difference. If this is so the proposed legal control will, however,

be of very limited efficacy. The EU enacts thousands of primary and secondary norms

every year. If there is indeed a problem of the kind that Davies’ argument is designed

to resolve, then judicial control will do little to cure the ills. Such control is dependent

on some one invoking the judicial machinery. The ECJ judgment will have little

precedential impact, since its ruling would be heavily fact specific. The ECJ would

decide that this particular EU regulatory intervention was disproportionate because it

involved too great an intrusion on Member State values. The limits to the efficacy of

legal controls would therefore be significant.

Conclusions

The application of subsidiarity has proven controversial in the past and this is unlikely

to alter significantly in the future. The connected aims that decisions should be made

at the most efficient level and that pluralism should thereby be enhanced are laudable.

In certain instances there may be no tension between attainment of the EU

objective and subsidiarity manifested in retention of substantive national discretion

resulting from broadly framed regulatory provisions leaving room for national choice,

or from enforcement discretion consequent on conscious assignment of this task to

national administrations. It may indeed be the optimal way of regulating the particular

area.

In other instances the fit between attainment of the EU objective and

subsidiarity has proven more problematic. A range of complex variables can affect

international institutional choice (Jupille, Mattli and Snidal, forthcoming). The

determination of which level of government is best suited for regulatory tasks can be

25

difficult, and the reality is that this decision will be coloured by what the Member

States are willing to accept in terms of the degree of regulatory control in any

particular area. The devil is almost always in the regulatory detail. The EU legislation

will embody choices and allocate risks between levels of government as to who

should bear responsibility when things go wrong. The results of these choices are

crucial to regulatory success or failure.

The stark lesson from some major areas of EU policy is that substantive or

enforcement subsidiarity has impacted negatively on regulatory efficacy. The EU

controls have had to be ratcheted up through Comitology regulations, which have then

been incorporated in later versions of the primary regulation. The very fact that the

revised primary regulation will embody political choice means that the previously

perceived problems might be only partially resolved, or new ones might be created as

a result of a change in direction in that area of EU policy.

The law in the sense of legislative design is therefore crucial. Its importance is

insufficiently appreciated and under-researched. The law in the more commonly

perceived sense of judicial review of compliance with subsidiarity has been of limited

impact for the reasons considered above. This is unlikely to change in the post-Lisbon

world, notwithstanding the enhanced role accorded to national Parliaments. The early

signs are that it will be rare indeed for the yellow and red card triggers to be met. The

Commission’s willingness to consider subsidiarity concerns raised by individual

Member States is to be welcomed, although we should be mindful of the dangers of

diluting such concerns if they merely become part of the general political dialogue

between Commission and Member States.

26

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