The "system to ensure that competition is not distorted"

Presidency conclusions (32 pages, PDF) from the European Council meeting. The Council agreed to convene an intergovernmental conference to draft proposed treaty amendments by the end of 2007.

The proposed revisions would replace Article 2 and Article 3 on the objectives and policies of the European Union with new provisions which refer to the internal market, but not to competition. But Article 3(1)(g) would be replaced with the following protocol, to be agreed alongside the Treaty (footnote 16 on page 24):

The High Contracting Parties, considering that the internal market as set out in Article 3 of the Treaty on European Union includes a system ensuring that competition is not distorted, Have agreed that, to this end, the Union shall, if necessary, take action under the provisions of the Treaties, including under Article 308 of the Treaty on the Functioning of the Union.

Another protocol on services of general interest (footnote 12 on page 21) would confirm the "wide discretion" of national governments in relation to the organisation of public services.

The French president explained these changes (press conference, from 1:40) as the replacement of competition as an end with competition as a means to achieve the internal market objective.

The protocol described by some as a UK opt-out from the charter of fundamental (social) rights is at footnote 19 on page 25. Declarations related to the ability of member states to maintain their own foreign policy are at footnotes 6, 13 and 22.

The document implies that we might not be subjected to another renumbering from the 1997 consolidated version of the EC Treaty.

Comment: Whatever might have led to it, I think that the "undistorted competition" change turns out to be an improvement in drafting. Article 3 is a dog's breakfast mixing objectives and activities. The fact that the scope of the EC system of competition and State aid law enforcement is limited to what is necessary for the operation of the internal market is already embedded throughout the case law, and it seems helpful to match the words on the face of the Treaty with that principle. The practice of hiding things in footnotes and protocols does not smell good, but in the case of competition the French president mentioned the protocol upfront when describing the changes. If implemented, the changes might have the effect on policy development (e.g. future liberalisation directives) that the French government was seeking; but as far as the application of EC competition and State aid law is concerned I can only see an improvement in clarity. Franck

For further information or advice please contact Franck Latrémolière.

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