By Laurens Ankersmit
This post concerns an interesting case (commented on by Steve Peers a while ago) on one of the main powers of the Commission that accompanies its right to initiate legislation: its right to withdraw a proposal. In Case C-409/13 Council v. Commission the Grand Chamber of the Court had to decide on the limits of this power to withdraw and its judgment has important implications for the balance of powers among the EU’s institutions. In a nutshell, the Court required the Commission to state reasons for an act of withdrawal and even assessed the Commission’s actions on the merits. While this means that withdrawals by the Commission may be challenged on both procedural and substantive grounds, the Court did nonetheless exercise deference towards the Commission. The case may have implications for the Commission’s controversial policy to ‘improve’ EU rules by inter alia withdrawing proposals for ‘unnecessary’ legislation in the future, although the deadline for challenging the withdrawal of the circular economy legislative package has already passed.
Facts and Judgment
The case concerned a proposal made by the Commission for a regulation laying down the basic framework for macro-financial assistance to third countries. In the past this had been done ad hoc on the basis of article 212 TFEU. The proposed regulation was aimed at structuring the decision-making in this sense. The Commission had proposed to grant assistance by way of implementing acts. The Parliament and the Council in particular objected to this approach as there would be insufficient political and democratic scrutiny of the decision-making process. As a result, the EU legislature intended to amend the proposal, essentially introducing the ordinary legislative procedure within the proposed regulation. The Commission considered this to be an unacceptable alteration of its proposal and decided to withdraw it. The Council (and not the Parliament) initiated proceedings against the Commission seeking annulment of the latter’s decision.
The Court had to decide on the limits of the power of withdrawal of the Commission. On the one hand, placing no limits on this power would amount to granting the Commission a de facto veto in the legislative process undermining the institutional balance. On the other, limiting the power of withdrawal opens the door to judicial review which would require the Court to develop criteria for the limits of withdrawal.
The Court started off with a number of statements of principle regarding the role of the institutions in the legislative process. It held that ‘the Commission’s power under the ordinary legislative procedure does not come down to submitting a proposal and, subsequently, promoting contact and seeking to reconcile the positions of the Parliament and the Council’ (para 74). On the other hand, the power of withdrawal cannot ‘confer upon [the Commission] a right of veto in the conduct of the legislative process, a right which would be contrary to the principles of conferral of powers and institutional balance.’ (para 75) As a consequence, the Commission ‘must state to the Parliament and the Council the grounds for the withdrawal, which, in the event of challenge, have to be supported by cogent evidence or arguments.’ (para 76)
The Court subsequently addressed the procedural issue of how the Commission had to state reasons (finding that merely communicating its intention to withdrawal in inter-institutional meetings was sufficient) and the substantive issue (finding that alteration of the voting rules in the proposal would deprive the proposal of its raison d’etre) to eventually rule in favour of the Commission on both points. The Court also dismissed the claim made by the Council of infringement of the principle of democracy and the principle of sincere cooperation.
The case is important for both the future of inter-institutional relations and the EU’s constitutional framework as well as the current Commission policy to avoid ‘unnecessary’ EU rules.
In terms of inter-institutional relations, it is clear now that the Commission’s right to withdrawal is constrained. The Commission’s decision to withdrawal is open to legal challenge and the Court is even willing to look at the substance of the claim, moving on from merely procedurally assessing whether the Commission has communicated its reasons to the EU legislature. The Commission may withdraw a proposal if an amendment by the EU legislature ‘distorts the proposal for a legislative act in a manner which prevents achievement of the objectives pursued by the proposal and which, therefore, deprives it of its raison d’être’ (para 83). This appears to be not an easy hurdle to meet for the Commission. It is not possible for the Commission to simply withdraw a proposal because it does not like certain amendments made. Unfortunately, the deadline for appealing the Commission’s withdrawal of its circular economy package has passed, so it is highly unlikely that the immediate impact of the Commission’s plans to ‘improve’ EU legislation can be challenged.
On the other hand, the Court is not very imposing on the Commission about how the Commission should communicate its reasons (procedure). There is no duty to communicate its decision to withdraw legislation to the public (the principle of democracy should arguably cover that) nor does the Commission need to formally substantiate its claims to the EU legislature. Merely communicating its intentions and the reason for its intentions to the EU legislature during meetings is enough.
Edit (4 June 2015): I would like to refer to Pieter Jan Kuijper’s recent informative blogpost on the blog of ACELG for further reading and a different view on the Court’s judgment.