Federal Republic of Germany v European Parliament and Council of the European Union.
Date: 1997-05-13
10 The German Government considers that the first and third sentences of Article 57(2) of the Treaty, which provide that the Council and the Parliament are to issue directives for the coordination of the provisions laid down by law, regulation or administrative action in Member States concerning the taking-up and pursuit of activities as self-employed persons, cannot constitute the sole legal basis for the Directive.  It claims that it follows from the first, second, fourth, sixteenth and seventeenth recitals in the preamble to the Directive that the Directive does not merely regulate banking operations but aims primarily to increase protection for depositors. Consequently, the Directive should also have been based on Article 235 of the Treaty.  Since Article 57 is a special provision in relation to Article 100a, the latter provision is not applicable in the present case.  Article 129a of the Treaty, which specifically concerns the protection of consumers, which include depositors, does not empower the Council to adopt, besides measures adopted pursuant to Article 100a, measures falling within the scope of the legal acts provided for in Article 189 of the Treaty.
11 The German Government concludes that, in the absence of the unanimity required by Article 235 of the Treaty, the Directive was not correctly adopted.
12 It should be observed in this regard that, in the context of the organization of the powers of the Community, the choice of the legal basis for a measure must be based on objective factors which are amenable to judicial review. Those factors include in particular the aim and content of the measure (see, most recently, Case C-268/94 Portugal v Council [1996] ECR I-6177, paragraph 22).
13 In the present case, in accordance with its first recital, which refers to the objectives of the Treaty, which are formulated in general terms in Article 2 thereof, the Directive aims to promote the harmonious development of the activities of credit institutions throughout the Community by eliminating any restrictions on freedom of establishment and the freedom to provide services, while increasing the stability of the banking system and the protection of savers.
14 According to Article 3(c) of the Treaty, the Community's activities are to include the creation of an internal market characterized by the abolition, as between Member States, of obstacles to the free movement of goods, persons, services and capital.  Article 7a of the Treaty then provides that the Community is to adopt measures with the aim of establishing the internal market in accordance, in particular, with Article 57(2) of the Treaty.
15 Consequently, the measures adopted in accordance with the latter provision contribute to the abolition of the obstacles to free movement which may result in particular from a divergence between the provisions laid down by law, regulation or administrative action in Member States concerning the taking-up and pursuit of activities as self-employed persons.
16 As the Court has held on several occasions, in the absence of coordination at a Community level the Member States may, subject to certain conditions, impose national measures pursuing a legitimate aim that is compatible with the Treaty and is justified on overriding public interest grounds, which include the protection of consumers (see, in particular, Case 205/84 Commission v Germany [1986] ECR 3755).
17 Consequently, the Member States may, in certain circumstances, adopt or maintain measures constituting an obstacle to free movement.  Article 57(2) of the Treaty authorizes the Community to eliminate obstacles of that kind in particular by coordinating the provisions laid down by law, regulation or administrative action in Member States concerning the taking-up and pursuit of activities as self-employed persons.  Since coordinating measures are concerned, the Community is to have regard to the public interest aims of the various Member States and to adopt a level of protection for that interest which seems acceptable in the Community.
18 The Directive provides for the compulsory participation by all credit institutions in guarantee schemes providing cover up to ECU 20 000 for the aggregate deposits of each depositor with a credit institution in the event of deposits' being unavailable.  Moreover the deposit-guarantee systems introduced by a Member State in accordance with Article 3(1) of the Directive are to cover depositors in branches set up by credit institutions in other Member States.
19 The effect of the machinery established by the Directive is to prevent the Member States from invoking depositor protection in order to impede the activities of credit institutions authorized in other Member States. Accordingly, it is clear that the Directive abolishes obstacles to the right of establishment and the freedom to provide services.
20 Consequently, the Parliament and the Council correctly adopted the Directive on the basis of Article 57(2) of the Treaty and were not required to use any other legal basis.
21 The plea that the Directive was not adopted on the proper legal basis must therefore be rejected.
The plea of infringement of the obligation to state reasons
25 The obligation under Article 190 to give reasons requires that the measures concerned should contain a statement of the reasons which led the institution to adopt them, so that the Court can exercise its power of review and so that the Member States and the nationals concerned may learn of the conditions under which the Community institutions have applied the Treaty (see, inter alia, Case C-41/93 France v Commission [1994] ECR I-1829, paragraph 34).
28 Consequently, it is apparent that, on any view, the Parliament and the Council did explain why they considered that their action was in conformity with the principle of subsidiarity and, accordingly, that they complied with the obligation to give reasons as required under Article 190 of the Treaty.  An express reference to that principle cannot be required.
36 In the light of the case-law referred to in paragraph 25 of this judgment, the Court finds that the Community institutions complied with their obligation to give reasons for the export prohibition.  In the 14th recital they explained that market disturbances could be caused by branches of credit institutions offering levels of cover higher than those offered by credit institutions authorized in the host Member State and also stated that the level and the scope of cover offered by the guarantee scheme should not become an instrument of competition.  They concluded that it was necessary, at least during an initial period, to stipulate that the level and scope of cover offered by a home Member State scheme to depositors at branches located in another Member State should not exceed the maximum level and scope offered by the corresponding scheme in the host Member State.
43 Second, it is true that the export prohibition is an exception to the minimum harmonization and mutual recognition which the Directive generally seeks to achieve. However, in view of the complexity of the matter and the differences between the legislation of the Member States, the Parliament and the Council were empowered to achieve the necessary harmonization progressively (see, to that effect, Case C-193/94 Skanavi and Chryssanthakopoulos [1996] ECR I-929, paragraph 27).
54 In response to those arguments it must be recalled that the Court has held that, in order to establish whether a provision of Community law complies with the principle of proportionality, it must be ascertained whether the means which it employs are suitable for the purpose of achieving the desired objective and whether they do not go beyond what is necessary to achieve it (see, in particular, Case C-84/94 United Kingdom v Council [1996] ECR I-5755, paragraph 57).
55 In assessing the need for the measure in question, it should be emphasized that the Community legislature was seeking to regulate an economically complex situation. Before the adoption of the Directive, deposit-guarantee schemes did not exist in all the Member States; moreover, most of them did not cover depositors with branches set up by credit institutions authorized in other Member States. The Community legislature therefore needed to assess the future, uncertain effects of its action.  In so doing, it could choose between the general prevention of a risk and the establishment of a system of specific protection.
56 In such a situation the Court cannot substitute its own assessment for that of the Community legislature.  It could, at most, find fault with its legislative choice only if it appeared manifestly incorrect or if the resultant disadvantages for certain economic operators were wholly disproportionate to the advantages otherwise offered.