← The hardest concepts in European Union law
In one breath
The internal market is an area without internal frontiers in which goods, persons, services and capital move freely, and the Union may approximate national laws to build it. Harmonisation is not a general power to regulate, and the Union may use it only where a measure genuinely helps the market function, by removing obstacles or appreciable distortions of competition.
The picture
The universal socket and the travel adapter
Travellers know the problem of plugs. Every country has its own shape, and a kettle that works at home is useless abroad. One cure is a travel adapter in the bag: the foreign socket is left as it is, and the visitor accepts it. Another is to fit every country with the same universal socket, so that nobody needs an adapter, but this requires everyone to agree on a design.
Mutual recognition is the adapter: a product lawfully made and sold in one State is accepted in the next, unless the second State can show a good reason to refuse it. Harmonisation is the universal socket: common rules replace national differences. Harmonisation can be total, leaving no room for national variation, or minimum, setting a floor above which States may go further. The Union tends to choose between them for each subject.
Where the picture stops working
A socket standard has no legal basis problem, but harmonisation does. The Union may not legislate simply because it would like uniform rules; it needs a Treaty basis, and the main basis (Article 114 of the Treaty on the Functioning of the European Union) is limited by its purpose. The picture also leaves out the effect on States: once a field is fully harmonised, national rules on the same matter are in general displaced.
How it really works
- 1Know where the rule comes from. The internal market is defined in the Treaty on the Functioning of the European Union (Article 26), and the main power to approximate laws is in Article 114. Its limits come from the Court’s case law.
- 2Identify the obstacle. Measures need a real link to the functioning of the internal market, for example divergences between national laws that block trade or distort competition.
- 3Check the legal basis. A measure that is really about public health or culture cannot use the internal-market power as a disguised route if its true aim and content lie elsewhere (Tobacco Advertising).
- 4Choose the technique. Total harmonisation fixes the rule and removes national freedom. Minimum harmonisation lets States keep or adopt stricter rules, provided these respect the Treaties.
- 5Consider the alternative. Where there is no harmonisation, the free movement rules and mutual recognition (see the pages on goods) can open markets without new legislation.
Why people get it wrong
- Treating Article 114 as a general power to regulate whatever affects trade. The Court has held that mere disparities between national laws, or an abstract risk of obstacles, are not enough.
- Assuming that harmonisation always means identical rules. Minimum harmonisation sets only a floor.
- Overlooking that harmonisation in an area can close the door on national rules, even those that would otherwise be justified.
- Confusing harmonisation with mutual recognition. The first replaces national law with common rules; the second accepts national law as it is.
- Forgetting that a measure with several aims is classified by its main aim and content, and that the choice of legal basis may be reviewed by the Court.
A worked example
The facts are invented
Imagine that several Member States set different maximum levels of a colouring agent in sweets, and that a producer in one State cannot sell in another without reformulating its recipe. The divergence blocks trade. The institutions propose a common maximum level, and the proposal rests on the internal-market power because it removes an obstacle to the free movement of sweets.
Now imagine a proposal to ban all sweets advertising throughout the Union, justified mainly by public health. If the real aim is health and any link with the market is slight, the internal-market basis looks stretched. A narrower measure that removes real obstacles to cross-border advertising would stand on a firmer footing. The first proposal is about making the market work; the second risks using that power as a general power over health.
Try it
A Union act banning all advertising of a product is adopted under the internal-market power, but its real aim is health protection and it removes few obstacles to trade. How is it likely to be treated?
Landmark authorities
Read the sources themselves; this list is a starting point.
- Germany v Parliament and Council (Tobacco Advertising), Case C-376/98, 2000
- Rewe-Zentral v Bundesmonopolverwaltung (Cassis de Dijon), Case 120/78, 1979
- Commission v Council (Titanium Dioxide), Case C-300/89, 1991
Where to go next
More hard concepts in European Union law
- Free movement of goods (Internal market)
- Free movement of workers and Union citizenship (Internal market)
- Freedom of establishment and freedom to provide services (Internal market)
- Regulations, directives and decisions (Sources of law)
- Direct effect (Union law in national courts)
This page is an educational overview. It is not legal advice and not a substitute for the sources: the statute, the rule, the case itself. EU law is made by the Union’s institutions under powers that the Member States have conferred on it in the Treaties, and it is applied by national courts and the Court of Justice together. The national law of each Member State still governs most of private and criminal law. Each page says whether the idea comes from the Treaties, from regulations and directives, or from the Court of Justice’s case law. Each page states the usual formulation of the rule and names landmark decisions; check the primary sources, and the law of your own Member State, before relying on any rule.