CRAIG Subsidiarity A Political and Legal Analysis

JCMS 2012 Volume 50. Number S1. pp.
72–87
Subsidiarity: A Political and Legal Analysis jcms_2228 72..87
PAUL CRAIG
St John’s College, Oxford
Abstract
The concept of subsidiarity was a notable addition to the Maastricht Treaty when it was first
introduced. It continues to be of political and legal significance in the post-Lisbon world. This
article considers subsidiarity from a political and legal perspective. It analyses the diverse ration-
ales behind its inclusion in the Treaty, and the reasons why it has proven difficult to realize the
objectives of subsidiarity. The focus then shifts to the legal dimension and considers the role played
by the EU courts in monitoring subsidiarity and suggestions that the EU courts should review
subsidiarity through a form of competence-proportionality control.
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 article analyzes the classic legal perspective, which is premised on the
assumption that the European Union (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 examines a more radical legal
critique with the argument being that subsidiarity should either be replaced or supple-
mented 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 article.
I. Historical Rationales
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 subsidiar-
ity within the EU. First and foremost was the perceived role of subsidiarity as a mecha-
nism 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
© 2012 The Author(s) JCMS: Journal of Common Market Studies © 2012 Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main
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Subsidiarity: a political and legal analysis 73
Articles 95 and 308 EC, gave rise to Member State concerns about the expansion of
European Community (EC) power to the detriment of states’ rights (Pollack, 1994). The
picture was further complicated by inter-institutional battles over the correct treaty pro-
vision to be used for EU legislation in particular areas, with the key being the degree of
participation and voting rights afforded to the institutional players (Bradley, 2011). Sub-
sidiarity 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 (subsidiarity) 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.
Second, 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 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 questioning the EU’s legitimacy. Scholars
explored the potential for differentiated integration, thereby avoiding unwarranted uni-
formity (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 Nicolaïdis, 2001;
© 2012 The Author(s) JCMS: Journal of Common Market Studies © 2012 Blackwell Publishing Ltd
74 Paul Craig
Kelemen, 2004). How to ensure that the division of power between the various 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 (Commission, 1994). This elastic criterion was interpreted
broadly to 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 (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. The same theme is apparent in the Lisbon Treaty, with re-
inforcement 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 (Craig, 2004; Di Fabio, 2002). There are, however, difficulties with this in
the post-Lisbon world.
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 amendments.
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.
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 and so on 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 than regulations has been designed to foster subsidiarity, and the
EU Courts regard directives as indicative of subsidiarity in terms of means of implemen-
tation.1 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 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 to 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 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,
has led to regulatory failure, with the consequence that the rules have had to be revised and
the level of EU control ratcheted up.
1
Case T-263/07: Estonia v Commission [2009] ECR II-3463; Case T-374/04: Germany v Commission [2007] ECR II-4431.
76 Paul Craig
The De Larosière report on failures in the regulatory regime concerning financial

supervision provides merely one high-profile example of this (De Larosière, 2009, para-
graphs 102–5). 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 enforce-
ment 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 super-
vision, 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 be detected (Craig, 2006). It begins with the primary regulation, which
embodies the political choices that shape the regulatory schema. This may leave signifi-
cant 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 appli-
cation 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 the European Court of Justice (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 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 means of detecting financial irregularity through audit and the
like. Individual Member States had an incentive to avoid these constraints – more espe-
cially 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.2
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, 2002). The
2002 Regulation was amended in 2006 and these changes together with others will be
enshrined in the 2012 Financial Regulation (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 exigu-
ous. 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 millen-
nium (Commission, 2002, 2007a) and has developed significantly since then (Commis-
sion, 2009). Impact assessment is a set of steps to be followed when policy proposals are
2
Case C-271/01: Ministero delle Politiche Agricole e Forestali v Consorzio Produttori Pompelmo Italiano Soc Coop arl
(COPPI) [2004] ECR I-1029; Case C-383/06: Vereniging Nationaal Overlegorgaan Sociale Werkvoorziening and
Gemeente Rotterdam v Minister van Sociale Zaken en Werkgelegenheid [2008] ECR I-1561.
78 Paul Craig
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. 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; whether the Union should be involved; if
so, what objectives it should 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 harmoniza-
tion, and the subsidiarity calculus, which is an explicit step in the overall Impact Assess-
ment 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 Assess-
ment. It has recently made reference, albeit cautiously, to the Impact Assessment.3
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 institutions that the Treaty pre-
cepts 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 27 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, with 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 is so depends on the degree of harmonization.
3
Case C-58/08: The Queen, on the application of Vodafone Ltd v Secretary of State for Business, Enterprise and Regulatory
Reform, 8 June.
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 (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 per cent raised subsidiarity
concerns. The number of opinions from national parliaments on a particular draft legis-
lative act never came close to triggering the yellow and red card mechanisms under the
Protocol on Subsidiarity. The 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 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
(European Parliament and Council, 2001). 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 regula-
tory 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
80 Paul Craig
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 (Commission, 2007b).
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 subsid-
iarity 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 govern-
mental 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 uncer-
tainty and increased costs because all other Member States can evince a similar attach-
ment 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 justifica-
tion, the low-intensity judicial review of subsidiarity by EU courts (Arnull et al., 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 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 20, 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 20 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 20 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 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 the result was the same.4 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 sub-
sidiarity legal challenges over a 20-year period is very low, more especially when con-
trasted 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 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.
4
C-58/04.
82 Paul Craig
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). He further contends that the central flaw is that
‘instead of providing a method to balance between Member State and Community inter-
ests, which is what is needed, it assumes the Community goals, privileges their achieve-
ment absolutely, and simply asks who should be the one to do the implementing work’
(Davies, 2006, pp. 67–8). He is 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; 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, it 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/co-ordinating/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 matter. In those areas where the EU
only has power to support, co-ordinate 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.
Second, 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’, 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 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’.
Third, there are difficulties concerning the legitimacy of the role accorded to pro-
portionality. 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 mark-
edly different from use of proportionality within Article 5(3) TEU as part of the sub-
sidiarity 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 the discussions
that led to the Constitutional or Lisbon Treaties. Thus Davies’ conception of propor-
tionality is premised on it 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 propor-
tionality 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 that is not part of the Treaty
schema.
Fourth, there are significant difficulties of adjudication. The EU courts should on
Davies’ view adjudicate as to whether the incursion on Member State values is dispro-
portionate 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 premised on collective action in which Member States have to make
compromises. Thus the mere fact that a Member State honestly believes that the legisla-
tion 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, or 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
84 Paul Craig
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 dangerous to fashion new legal doctrine on the basis of hypothetical examples
– 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 and so on. 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 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 someone
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 intru-
sion on Member State values. The limits to the efficacy of legal controls would there-
fore 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 et al.,
forthcoming). The determination of which level of government is best suited for regula-
tory tasks can be 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, notwith-
standing 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.
Correspondence:
Paul Craig
St John’s College
University of Oxford
Oxford, OX1 3JP
UK
email paul.craig@law.ox.ac.uk
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JCMS 2012 Volume 50. Number S1. pp.

Subsidiarity: A Political and Legal Analysis jcms_2228 72..87

II. Difficulties with Realization

Applicability of Subsidiarity Pre-Lisbon

Applicability of Subsidiarity Post-Lisbon

The De Larosière report on failures in the regulatory regime concerning financial

Taking Subsidiarity Seriously

prepared, alerting political decision-makers to the advantages and disadvantages of policy

Subsidiarity and Private Actors

III. Increased Intensity of Judicial Review

IV. Competence-Based Proportionality Review

Commission of the European Communities (2002) ‘Impact assessment’. COM(2002) 276

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