Germany v Parliament (Case C-233/94) [1997] ECR I-2405

Facts

  • The Federal Republic of Germany challenged Directive 94/19/EC, the Deposit Guarantee Directive, adopted by the European Parliament and the Council.
  • The Directive aimed to harmonise national deposit-guarantee schemes for credit institutions in the EU, with the dual objective of protecting depositors and maintaining financial stability.
  • Germany contended that the Directive infringed the principle of subsidiarity, arguing that Member States were capable of independently achieving the Directive's aims.
  • The dispute centered on the necessity of Union action versus the adequacy of national measures within Member States, given the objectives of consistent depositor protection and financial market stability.

Issues

  1. Whether Directive 94/19/EC fell within the competence of the European Union under the internal market provisions.
  2. Whether the principle of subsidiarity, as enshrined in Article 5(3) TEU, was breached by the adoption of the Deposit Guarantee Directive.
  3. Whether Union action was necessary or if Member States could sufficiently achieve the Directive’s objectives by acting individually.
  4. Whether Union intervention offered a clear added value or comparative advantage over action at the Member State level.

Decision

  • The CJEU found that the Deposit Guarantee Directive fell within EU competence concerning the internal market.
  • The Court concluded that Member States, acting individually, could not sufficiently achieve the objectives of the Directive due to the cross-border nature of financial markets and the risk of regulatory competition.
  • The CJEU held that EU-level harmonisation provided a clear added value by ensuring consistent depositor protection and market stability across Member States.
  • The challenge by Germany was rejected, with the Court affirming that the subsidiarity principle had not been breached.

Legal Principles

  • The principle of subsidiarity requires Union action only when objectives cannot be sufficiently achieved by Member States, but can be better attained at Union level by reason of scale or effects.
  • The insufficiency of Member State action must be demonstrated, alongside evidence of the added value of Union intervention.
  • Subsidiarity operates within conferred competences and is a justiciable principle subject to judicial review.
  • Harmonisation measures at Union level may be justified where unilateral actions by Member States risk competition distortion or undermine market confidence.

Conclusion

The CJEU confirmed that the Deposit Guarantee Directive complied with the principle of subsidiarity, establishing that EU action is legitimate where Member States cannot adequately achieve the objectives and Union intervention offers a clear comparative advantage. This judgment provides a structured framework for assessing subsidiarity, shaping the future of EU legislative procedures and safeguarding a balanced distribution of competences.

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