Questioning the coherence of the freedom to conduct a business: Insights from the Court of Justice of the European Union

A. The freedom to conduct a business in disputes within the Common Agricultural Policy

While not being a dispute in which a CAP measure was challenged, a case that indubitably merits attention as a starting point is the 1974 Nold judgment. This is because of its foundational recognition of a freedom akin to what we nowadays distinguish as the freedom to conduct a business, thereby establishing a precedent for subsequent litigation invoking this freedom. In this case, Nold sought the annulment of a Community decision that resulted in the revocation of its position as a direct wholesaler within the German coal market, as this EC legal act amounted to a breach of its fundamental rights. Using Member States’ constitutions as a primary source, the Court recognized, next to the right of property, the right to freely choose and practise a trade or profession as an ‘(…) integral part of the general principles of [Community] law’. ²⁰

The Court has consistently articulated in the sequential case law ²¹ that the rights guaranteed within the EU legal framework were not absolute prerogatives. According to the now-famous disclaimer, these rights must be viewed in light of the social function of the property and the activities protected thereunder. Therefore, they can be subject to all kinds of limitations under the condition that the measures resort to the Community/Union's objectives, such as market structuring or health, consumer or social protection. ²² Such limitations should thus be in accordance with the public interest and can only exist if the substance of these rights is left untouched. Ultimately, the Court concluded that the imposed Community-regulation did not violate Nold's freedom to conduct a business or right to property. ²³

In Nold, as in following judgments, ²⁴ in which applicants relied upon these uncodified freedoms – often to challenge measures stemming from the CAP – the Court resorted to different arguments to come to the same conclusion that there is no breach of a fundamental right. In some early cases, such as Nold, Spa Eridiana, ²⁵ Walter Rau ²⁶ and Kuhn, ²⁷ the Court followed the logic that economic operators could not legitimately claim a vested right in the maintenance of an advantage, which it obtained from the establishment of the common organization of the market and which it enjoyed at a given time. ²⁸ Accordingly, the right to property and the freedom to conduct a business – in which the Court does not draw any significant difference ²⁹ – do not protect economic operators from losses due to new market or structural policies designed to respond to economic changes, such as some measures stemming from the CAP. Challenges to CAP measures, which often involve market restructuring mechanisms like permits, quotas or co-responsibility levies, have generally not succeeded when they are based on these economic freedoms. ³⁰

In other cases, such as Hauer, ³¹ the Court has primarily construed the freedom to conduct a business as a subset of the right to property – focusing extensively on the latter while only briefly addressing the former. ³² With regard to the freedom to conduct a business, the Court has maintained in multiple decisions that restrictions do not necessarily compromise the very substance of this freedom as they do not preclude the operators in question from partaking in the activities entirely but rather prescribe the manner in which the economic activities are practised, ³³ and they merely pose a marginal burden. ³⁴ Yet even in instances in which a measure entirely prohibits an economic activity, albeit temporarily (namely, for three years), the Court considers this to be legitimate and proportionate or does not compromise the substance of the freedom to conduct a business. ³⁵ Finally, the Court quickly evaluates whether the objectives of the contested measures are legitimate and, upon affirming their validity, concludes – often without extensive justification – that these measures are consistent with fundamental rights because they are suitable for achieving the intended objectives. ³⁶

Within the context of the CAP only in two instances, Neu ³⁷ and Spain/Commission, ³⁸ did the Court arrive at a divergent conclusion. Although the Court in other cases consistently held that a quota reduction would not amount to violating the freedom to conduct a business, in Neu, the situation was, according to Advocate General Darmon, a bit more ‘delicate’. ³⁹ In Neu, in 1991, the Court had to interpret a regulation aimed at ensuring that the quantities of milk and milk products marketed do not exceed the overall guaranteed quantity for the Community. The Court ruled in favour of the milk producers challenging the regulation, stating that a producer's individual reference quantity should not be decreased when merely changing milk purchaser, as this does not result in additional product quantities being marketed. Accordingly, this would be in contrast with the principle of pursuing a trade or profession, which ‘includes the freedom to choose whom to do business with’. ⁴⁰ In Spain/Commission, eight years after Neu, the Court had to decide whether a change of date in the Spanish fruit growers’ contracts to receive more Community aid was fraudulent and contrary to Community rules – as it was according to the Commission. The Court, however, followed the Spanish fruit growers’ approach, as the right of parties to amend contracts is based on the principle of freedom of contract ⁴¹ – which is one aspect of Article 16 of the Charter ⁴² – and ‘cannot, therefore, be limited in the absence of Community rules imposing specific restrictions in that regard’. ⁴³

B. The freedom to conduct a business as a ‘weak’ freedom in challenging CAP measures

The Court's judgments in Neu and Spain/Commission are notable exceptions within a body of case law that generally did not favour applicants challenging market interventions and restrictions on the freedom to conduct a business. Even if a specific market activity is prohibited (even if it is just for a limited time), these measures are deemed proportional to achieving the objective and not violating the freedom to conduct a business. ⁴⁴ Moreover, in some early instances, the Court even seems to doubt whether such freedom actually exists. For instance, in Hauer, the Court assesses the limitations imposed on the ‘freedom to pursue a trade’ ⁴⁵ merely under the condition of ‘assuming that it exists’. ⁴⁶ In that context, from this early case law, it is difficult to discern what interests this freedom shields. While the Court began shaping the content of the freedom to conduct a business, as shown by Neu and Spain/Commission, it must be seen that such freedom – while recognized – was not decisive on many occasions and was not able to challenge the measures stemming from the CAP successfully.

Notably, during the early pre-Lisbon period, the Court did not curtail measures on the grounds that the EC/EU legislator was liable to impinge upon the entrepreneurial freedom of businesses for the purpose of achieving specific objectives. Even in Neu and Spain/Commission, the Court merely uses the freedom to conduct a business as a means to interpret Community law restrictively, but determined by the Community/Union objectives and in favour of the applicants. Yet, that restrictive interpretation is thus still anchored within the legislative framework established by the EC/EU legislator. In other words, in these disputes, the Court's construal of the freedom to conduct a business does not constrain the legislative discretion of the EC/EU legislation.

Moreover, under Community law, the recognition of the freedom to conduct a business did not compel the Court to apply a rigorous or ‘strict’ standard of review to measures stemming from the CAP. The Court’s judicial stance suggests that it views the freedom to conduct a business as allowing a broad range of regulatory intervention, thus offering it a relatively modest level of judicial protection. ⁴⁷ Critics have noted that the Court's review was minimalistic, particularly in its early jurisprudence, which contrasts with the Court's later adoption of a more comprehensive three-pronged test evaluating legitimacy, necessity and proportionality. ⁴⁸ In the early case law, the Court often merely assessed the suitability of the regulations of the disputed EC/EU measure to attain the objective. According to Harvey, ‘[o]verall, there was evidently a reluctance to engage in any meaningful degree of scrutiny of whether any less restrictive measures were available (necessity) and/or whether the overall balance between rights and objectives was proportionate (proportionality stricto sensu). ⁴⁹

Instead, the Court yielded the EU Commission and the EU Council broad discretion in regard to their market regulations, meaning the freedom to conduct a business allows for many interventions. As for matters in the CAP, as also frequently mentioned by the Court, ⁵⁰ it used a mere ‘manifest-disproportionality-test’ ⁵¹ to review a CAP measure in light of the freedom to conduct a business. This test limited the Court's examination to whether there was an obvious error in the legislative policy, an abuse of power or a clear overreach of administrative discretion. ⁵² Such an approach indicates that the Court's primary concern was not to ensure an efficient relation between the means employed by the legislation and the ends they sought to achieve, particularly in relation to the interests safeguarded by the freedom to conduct a business. ⁵³

As mentioned, the Court was reluctant to scrutinize the effectiveness of these technical CAP measures in light of the freedom to conduct a business being potentially hampered. Moreover, in the broader context of measures stemming from the CAP, the Court even upheld measures which were, as Harbo writes, ‘(…) characterised as “a choice of economic policy which [was] in certain respects regrettable”, ⁵⁴ or found them to be outright ineffective’. ⁵⁵ The legality of a Community act cannot, according to the Court, depend on retrospective considerations of its efficacy. ⁵⁶ Even when a less interventionist and more effective legislative approach was conceivable, the Court asserted the proportionality of the existing measures.

Overall, the Court recognizes the freedom to conduct a business as part of the principles of Community law, yet its interpretation has not been instrumental in successfully challenging EC/EU measures. This remains true even when such measures significantly impede business activities or when their effectiveness is questionable. The Court adopted a minimalist approach to interpreting the freedom to conduct a business primarily within the legislative framework of the CAP, while not exhibiting much concern for the actual effectiveness of these highly technical market measures to achieve the EC/EU objectives laid down therein – and perhaps with good reason. ⁵⁷ The Court's jurisprudence suggests that the freedom to conduct a business was not considered a robust right warranting a stringent standard of review. Instead, it yielded wide discretion towards the EC/EU legislator and did not seem willing to overturn EC/EU legal acts. Accordingly, and on that basis, it could be asserted that the Court, prior to the entry into force of the Lisbon Treaty, viewed the freedom to conduct a business as a rather ‘weak’ freedom, carrying a limited normative weight.

A. Balancing business freedom with information freedom

In the first few cases brought before the Court since the declared binding force of the Charter, the applicant was the Belgium copyright management company, SABAM. In the case SABAM v. Scarlet Extended ⁶³ in 2011, SABAM sought to compel Scarlet Extended (‘Scarlet’), an internet service provider (‘ISP’), to install a filtering system to prevent its customers from illegally downloading copyrighted musical works. Scarlet, however, claimed such a filter would be in violation of its freedom to conduct a business. The Court's ‘fair-balancing’ ⁶⁴ of these qualified rights opens with the consideration that such an injunction would be in violation of Scarlet's freedom to conduct business as Scarlet would have to install a complicated, costly, permanent computer system at its own expense. ⁶⁵ Therefore, the mandated injunction contravenes the proportionality conditions for these measures laid down in Article 3 (1) of the Enforcement Directive, ⁶⁶ as they require those measures to be fair, equitable and not necessarily costly and complicated. However, the requested measure to install a filter would not only have consequences for Scarlet: as Advocate General Cruz Villalón notes, such measure ‘(…) is in fact designed to have a long-term effect on an unspecified number of legal or natural persons, ISPs or internet users, providers of services in the information society and users of those services.’ ⁶⁷ Hence, imposing such an injunction would also violate Scarlet's customers’ rights, namely the right to personal data protection and the freedom of information (Articles 8 and 11 of the Charter), as it would assess all their data and might block their lawful communications for an unlimited time. ⁶⁸ For that matter, the Court used Scarlet's freedom to conduct a business, as well as the right to personal data protection and freedom of information of its customers, to interpret the directive restrictively. Consequently, the Court determined that an injunction mandating Scarlet to implement such a filtering system to protect the intellectual property rights of SABAM was untenable.

A year later, in 2012, SABAM filed a case against online social network Netlog, demanding, similarly to Scarlet, the installation of a filtering system to prevent copyright infringements by Netlog's users, akin to the earlier case against Scarlet. ⁶⁹ Hence, in SABAM v. Netlog ⁷⁰ the Court reiterated its stance from the Scarlet case, determining that the injunction of installing a filter system would violate the freedom to conduct a business of Netlog and the right to personal data protection and the freedom of information of its users. However, in the event of an injunction requiring an ISP to block a specific, strictly targeted individual website, such as in UPC Telekabel Wien (‘UPC’), ⁷¹ the Court rules differently. The Court considered that a targeted injunction requiring an ISP to block access to a specific website could legitimately restrict the ISP's business freedom. ⁷² This restriction was deemed justifiable provided that the measures implemented by UPC did not violate the fundamental right to freedom of information of its users. ⁷³ While the imposition of a complex and costly measure breached the business freedoms of Scarlet and Netlog, this was not the case for UPC. Despite the ‘significant costs’ ⁷⁴ associated with implementing a blocking system, the Court held that this did not infringe upon UPC's freedom to conduct business, as it allowed the company to demonstrate that it had taken all reasonable measures to prevent copyright infringements. ⁷⁵ Therefore, the injunction at issue leaves UPC free to choose the measures which are best adapted to the resources and abilities available. ⁷⁶

These cases collectively illustrate the Court's interpretation of the freedom to conduct business together with the rights to personal data protection and freedom of information. The judgments indicate a nuanced interpretation of Article 16 of the Charter, aiming to ensure that companies also protect their customers’ freedom of information. However, these cases also reveal inconsistencies in the Court's conclusions regarding the protection of business interests under Article 16 of the Charter. While in Scarlet and Netlog the Court held that the freedom to conduct a business protected against the imposition of costly measures to prevent property rights infringements, it reached the opposite conclusion in UPC, imposing an obligation on the company to ensure compliance with the freedom of information when selecting measures to prevent copyright infringements.

From these cases, it can be deduced that the freedom of information plays a critical role in the Court's interpretation of Article 16 of the Charter, which is further evidenced in the case of DR and TV2 Danmark v. NCB. ⁷⁷ In that case, NCB pleaded that DR and TV2 Danmark (two public broadcasting organizations) infringed its customers’ copyrights. The legal question centred on whether recordings made by third parties, subcontracted by the broadcasters, fell under a specific exemption in the InfoSoc Directive, which constitutes an exception to the author's exclusive reproduction right. ⁷⁸ While interpreting the secondary legislation to evaluate the alleged infringement of NCB's customer's copyright, the Court posited that ‘[i]n the assessment of the choices of interpretation available to the Court, that approach finds support in the fact that it ensures that broadcasting organizations have a greater enjoyment of the freedom to conduct a business.’ ⁷⁹ Eventually, NCB's pleas thus failed to convince the Court as it yielded wider business freedom for broadcasting organizations, which influenced its adopted broader interpretation of the exception in the directive.

Despite the Court's lack of further elaboration on its reasoning, it appears that the unique role of broadcasting organizations in providing access to and distributing information within the European Union may have influenced this decision. This seems further evidenced by later case law, which shows the Court's endorsement of enhanced business freedom for broadcasting organizations to be contingent upon these entities also safeguarding the freedom of information. For instance, in scenarios where there is a need to balance informational freedom against the freedom to conduct a business, the former seems to outweigh the latter, such as in Sky Österreich, ⁸⁰ in which the Court was asked to consider the validity of a provision of the Audiovisual Media Services Directive. ⁸¹ Central to this case was whether Sky Österreich, a company which sold broadcasting rights to Österreichischer Rundfunk (‘Rundfunk’) to produce short news, was entitled to charge a fee in excess of the reimbursement of the costs directly incurred in providing access to Rundfunk. The Court found that Sky Österreich cannot freely decide with which broadcasters it may wish to enter into an agreement or against which price. ⁸² For the reason of safeguarding the freedom to receive information, to promote pluralism of the media, and since remuneration does not extend itself to all broadcastings, these restrictions on the freedom of contract are, in view of the Court, legitimate and proportionate. ⁸³

B. The freedom to conduct a business with an increasingly dynamic substance

As previously discussed, within the framework of the CAP, the Court adopted a predominantly ‘weak’ stance towards the freedom to conduct a business. The Court interpreted this freedom primarily within the EC/EU legislative framework, showing considerable deference to the legislator and being reluctant to scrutinize the actual effectiveness of such measures to achieve EC/EU objectives. Such a deferential approach is similarly reflected in Article 16's ‘weak’ depiction in the Charter.

The cases discussed above initially seem to show a different picture and a ‘stronger’ emphasis on economic freedom, as evidenced by the SABAM rulings, which featured two successful pleas based on Article 16 of the Charter. This was further exemplified in the NCB versus DR and TV2 Danmark case, in which the Court expanded the freedom to conduct a business of broadcasting organizations. However, a thorough analysis of these cases does not suggest a fundamental departure from previous jurisprudence. The Court's approach to the freedom to conduct a business remains characterized by its interpretation within the EU legislative framework.

In particular, despite the Court failing to provide substantial reasoning as to its approach in the information society cases, the Court's interpretations of Article 16 of the Charter seem to reflect its integration with the EU objectives laid down in the EU directives, namely the advancement of an information society. This consideration builds on an argument made by Comparato and Micklitz, who assert that the freedom to conduct a business is ‘marketised’ and ‘an instrument to conform individual behaviour for the purpose of achieving the policy objectives of the European Union’. ⁸⁴ According to these scholars, the Court's balancing act of Article 16 of the Charter in this set of discussed cases must be seen in the light of the EU policy objectives set out by the Commission laid down in the directives, that is, the establishment of a European ‘information society’. ⁸⁵ Advocate General Bot's opinion in Sky Österreich supports this interpretation, suggesting that fundamental rights within the Union should be understood in the context of these policy objectives:

(…) according to the case law of the Court, fundamental rights within the Union must be safeguarded in the context of its structure and objectives. In this connection, several recitals in the preamble to the Directive stress that it contributes, in its field, to the completion of the internal market. Thus, recital 2 of the Directive refers to the need to ‘ensure the transition from national markets to a common programme production and distribution market’ and recital 11 states that the application of at least a basic tier of coordinated rules to all audiovisual media services helps ‘to (…) complete the internal market and facilitate the emergence of a single information area’. ⁸⁶

Moreover, and in this light, the Court also seems to stress the effectiveness of some of the measures impinging the freedom to conduct a business in some of these cases. For instance, in the Sky Österreich judgment the Court arguably granted discretion towards the EU legislator regarding its restrictions imposed on the freedom to conduct a business to safeguard the fundamental freedom to receive information and the promotion of pluralism of the media in the EU. ⁸⁹ However, in regard to its proportionality assessment of the challenged restriction, the Court notes that despite a less restrictive measure being available, ‘(…) it is apparent that less restrictive legislation would not achieve the objective pursued by Article 15(6) of Directive 2010/13 as effectively as the application of that provision.’ ⁹⁰ In the context of achieving the objectives of the information society, it appears that the Court thus allows for more restrictive measures merely under the condition that they are more effective in achieving the intended EU objective. This, however, is not at all comparable with the ‘manifest disproportionality’ test applied by the Court to technical CAP measures, where effectiveness was often a minor consideration. This shift suggests that the Court is constructing Article 16 of the Charter in increasingly closer alignment with the effective realization of EU objectives outlined in the directives. However, despite emphasizing the effectiveness of these measures, the Court maintains a stance of deference towards the legislator, similar to its approach in CAP disputes. In other words, it does not constrain the EU or Member States from regulating business freedom to achieve specific objectives.

The Court's approach to the freedom to conduct a business, of course, ultimately results in notable inconsistencies in case law, as visible. For instance, in Sky Österreich, the Court deemed limitations on the freedom of contract to be legitimate, in contrast with its earlier decisions, which recognized that the freedom to conduct business included the ability to determine service prices ⁹¹ or choose business partners, as seen in Neu. ⁹² Although this method of interpreting business freedom in relation to the EU legislator is perhaps commendable, ⁹³ the Court's overall balancing act while undertaking that approach also shows inconsistencies in similar contexts. As mentioned, in Scarlet and Netlog, the Court determined that implementing a complex, technical filter to prevent copyright infringements would adversely affect the freedom to conduct business due to the substantial costs involved. However, in a similar case involving UPC, the Court held that the significant expenses associated with such measures did not infringe on UPC's business freedom. Instead, it emphasized that UPC must ensure compliance of the measures taken with the freedom of information to address copyright infringements effectively. One can wonder why the Court deemed the substantial costs not to be safeguarded by Article 16 of the Charter in UPC, whereas in the instances of Netlog and Scarlet, such costs were considered to fall under its protection. These judicial decisions illustrate that the Court's application of the freedom to conduct a business is not uniform across relatively similar cases as the Court appears to facilitate the EU objectives in different ways. Ultimately, this indicates that the Court has a deeply flexible or dynamic stance towards Article 16 of the Charter. Although the overall approach of interpreting the freedom to conduct a business in light of the EU objectives may not be inherently problematic, the Court's decision to rule differently in similar contexts is, in fact, troubling, as these inconsistencies between rulings create significant legal uncertainties.

Finally, comparing the Court's approach to CAP disputes and cases within the information society, it is evident that the Court continues to show deference to the EU legislator, albeit in a somewhat limited form thereof. Nonetheless, in its adherence to the directives’ objectives, the Court employs varying balancing acts in comparable contexts, as demonstrated by the cases of Scarlet, Netlog and UPC. This variability introduces uncertainty regarding the specific interests that Article 16 of the Charter is intended to protect. Furthermore, subsequent cases will demonstrate that the Court's overall approach as regards the deference granted to the legislator also lacks coherence. In certain later decisions, the Court interprets the freedom to conduct a business in a manner that limits the objectives outlined in the directives. This incoherence contributes to further uncertainties concerning the scope and core of this freedom within the EU constitutional framework.

A. The freedom to conduct a business and the protection of workers

A particularly contentious case concerning Article 16 of the Charter is Alemo-Herron. ⁹⁹ In this ruling, the Court interpreted a piece of secondary legislation ¹⁰⁰ aimed at safeguarding employees’ rights during transfers of undertakings. The specific transfer involved services being outsourced from a public authority to a private company, in which the issue was whether the transferee was bound to dynamic clauses in employees’ contracts tied to public sector collective agreements. While the Court strictly adhered to the wording of the directive, recognizing that Member States could adopt a more comprehensive system of employee safeguards, it also asserted that it imposed limitations on the extent of these protections. The Court emphasized that the directive required the transferee to have the flexibility to make necessary adjustments and changes to carry on its operations, which were considerable given the inevitable differences in working conditions between the public and private sectors. ¹⁰¹ In the Court's view, the transferee was not in such a position, as it could not engage in the bargaining process of public sector collective agreements, which hindered the effective representation of the company's interests. Consequently, the transferee was not bound by dynamic clauses as that adversely affected the essence of the freedom to conduct business. ¹⁰² In Alemo-Herron, the Court interpreted Article 16 of the Charter thus very differently from earlier case law, such as CAP-cases or Sky Österreich, as in those cases, the Court consequently held that since the ‘provision does not prevent a business activity from being carried out as such’, ¹⁰³ the measure at stake does not ‘affect the core content of the freedom to conduct a business’. ¹⁰⁴

Moreover, the Court's interpretation of Article 16 of the Charter restricts the objective of the directive as it curtails Member States’ ability to offer more social protection for employees and limits their regulatory authority over business operations. This interpretation of the freedom to conduct a business clearly deviates from previously discussed cases in which the Court's approach to the freedom to conduct a business was more aligned with enhancing rather than restricting legislative objectives. In fact, in Alemo-Herron, the Court poses a cap on employee safeguards that Member States can impose on companies and limits their regulatory competencies when it comes to regulating business freedom. As Weatherhill notes, this application of Article 16 of the Charter is to ‘(…) write in a major limitation to the legislative grant of autonomy to Member States to adopt measures more favourable to employees.’ ¹⁰⁵

The Court reiterated its ‘restrictive’ logic concerning the directive's objective in its related Asklepios ¹⁰⁶ judgment, stating that the ‘transferee must be able to assert its interests effectively in a contractual process’. ¹⁰⁷ Despite the similar reasoning to Alemo-Herron, the Court found that if a national rule allows the transferee to make both consensual and unilateral adjustments, the transferee is not only bound by the collective agreement in force on the transfer date but also by subsequent agreements. ¹⁰⁸ Since this national rule was already in place, the Court concluded that there was no violation of the freedom to conduct a business.

Yet the reasoning in Alemo-Herron contrasts with the earlier case of Werhof, ¹⁰⁹ in which a similar question emerged before the Court. In Werhof, the Court ruled that Article 3(1) of the Directive ¹¹⁰ does not require the transferee to be bound by collective agreements concluded after the date of the business transfer. ¹¹¹ Unlike in Alemo-Herron, the Court in Werhof thus held that Member States have the discretion to decide whether these collective agreements bind the transferee. In other words, in Werhof the Court did not limit the directive's objective of allowing Member States to offer more protection to employees. In light of this, and compared to Werhof, Prassl considers the Court's reasoning in Alemo-Herron to be ‘significantly flawed’. ¹¹²

Despite intense critiques sequential to Alemo-Herron, ¹¹³ the Court did not deviate from such a ‘forceful’ approach to Article 16 of the Charter when it had to interpret, a few years later, a Greek law that transposed an EU directive ¹¹⁴ aiming to partially harmonize rules for protecting workers in the event of collective redundancies, for which prior authorization from the Greek Minister of Labour was required. ¹¹⁵ In the case involving AGET Iraklis, a subsidiary of the French multinational Lafarge, the Court had to examine the requirement for prior authorization from the Greek Minister of Labour for collective redundancies across its cement plants situated in Greece. The Court argued that the obligatory prior authorization violated the companies’ freedom of establishment (Article 49 TFEU) and its freedom to conduct a business. In its three-fold proportionality assessment, the Court deemed that the criteria upon which the required authorization could be declined were formulated in general and imprecise terms, leaving the authority concerned with a discretion that is difficult to review. ¹¹⁶

Despite the directive granting Member States the option to guarantee augmented protection to workers – recognized by the Court ¹¹⁷ – it stated that the effective application of the Greek legislation can not have the consequence of depriving the directive's provisions of their ‘practical effect.’ ¹¹⁸ As Giubboni clarifies:

[i]n other words, in addition to the procedural requirements envisaged by Directive 98/59, the national legislator may well introduce substantial limits (‘objective requirements’) to the entrepreneur's power to effect planned collective dismissals. However, the national legislator will not be able to go as far as to introduce substantive requirements so stringent as to jeopardise – as the Greek legislation appears to do – the employer's fundamental economic freedom. ¹¹⁹

Two other rulings in which the Court's forceful reading of Article 16 of the Charter seems to take the stage as it asserts minimal thresholds for corporate freedom are the headscarf cases. In the cases of Achbita ¹²⁰ and WABE, ¹²¹ the Court had to balance employers’ business freedom with their employees’ religious freedom (Article 10 of the Charter). In Achbita, the Court ruled that a company's desire to display an image of neutrality towards customers, hence prohibiting visible signs of beliefs (like an Islamic headscarf), did not constitute direct or indirect discrimination. ¹²² To justify this policy, the Court argued that the neutrality policy related to a company's freedom to conduct a business and was ‘in principle, legitimate’. ¹²³ However, the Court did not precisely explain why such a policy is inherently legitimate. ¹²⁴

Within that context, Spaventa points to a similar logic in the Court's approach as occurring in Alemo-Herron and AGET Iraklis, noting that the specific directive ¹²⁵ is designed to set only minimum standards, thereby allowing Member States to provide greater protection. ¹²⁶ Yet by this application of the freedom to conduct a business the Court effectively set a limit on the level of protection the Member States could provide against religious discrimination, suggesting that more extensive protections might ‘infringe upon the right to conduct a business as protected by the Charter’. ¹²⁷ Consequently, the Court established minimum standards for corporate freedom, asserting that companies should at least have the right to maintain a policy of neutrality. This interpretation ultimately constrains the EU's objective of permitting Member States to enhance employee protections.

Despite or due to heavy objections from legal scholars, ¹²⁸ the Court slightly altered its balancing act of Article 16 of the Charter with the freedom of religion in the subsequent WABE case. The Court includes the condition that ‘the mere desire of an employer to pursue a policy of neutrality – while in itself a legitimate aim – [does not sufficiently] justify objectively a difference of treatment indirectly based on religion or belief since such a justification can be regarded as being objective only where there is a genuine need on the part of that employer.’ ¹²⁹ While this heightens the burden of proof for companies to demonstrate such a genuine need, it does not fundamentally alter its precedent's judgment of ultimately providing companies with the freedom to display an image of neutrality towards their customers and limiting Member States’ discretion to augment worker safeguards considerably. ¹³⁰

B. The freedom to conduct a business as a ‘strong’ freedom

As asserted in the context of the CAP or the information society, the Court has generally shown deference to the EU legislator when interpreting the freedom to conduct a business. This deference is evident as the Court previously interpreted the freedom to conduct a business primarily within (section 2) the framework of EC/EU law or in light of (section 3) the EU objectives laid down therein. Accordingly, the EU objectives determine the Court's interpretations, and it grants discretion towards the EU's or Member State's legislative branch of government. Hence, both strategies do not effectively intervene in the market versus state balance, which is, according to critiques of this set of jurisprudence, predominantly a political determination that should be subject to the EU's or Member States’ democratic institutions – and not the EU judiciary. ¹³¹

However, cases such as Alemo-Herron, AGET, Achbita and WABE seem to demonstrate the Court's interpretations limit the EU objectives. In those cases, the Court basically concludes that, despite the objectives of EU directives allowing for extended legal safeguards to employees, Member States implementing these directives are not permitted to go that far in their social aspirations and the protection of workers. Instead of offering discretion towards Member States’ democratic institutions, the Court is re-determining democratically defined limitations on the market; otherwise, these Member States are, in the Court's view, liable for violating companies’ freedom to conduct a business. Rather than interpreting Article 16 of the Charter in accordance with EU objectives, the Court restricts what is permissible under EU objectives, thereby narrowing these objectives.

Yet some commentators have suggested that in Alemo-Herron and AGET Iraklis the Court is merely facilitating Member States’ ability to achieve objectives to safeguard employees – thus not limiting these objectives. ¹³² They argue that overly burdensome limitations on businesses could lead to insolvency, which would ultimately be detrimental to employee protection. For example, Advocate General Wahl argues in its legal opinion to AGET Iraklis that:

by restricting the employer's ability to dismiss the workers collectively, the rule at issue merely gives the impression of being protective of workers. To begin with, that protection is only temporary until the employer becomes insolvent. Even more importantly, workers are best protected by an economic environment which fosters stable employment. Historically speaking, the idea of artificially maintaining employment relationships, in spite of unsound general economic foundations, has been tested and has utterly failed in certain political systems of yesteryear. ¹³³

In this context, the Court's stance departs from the large discretion previously offered towards the EU Council and Commission or Member States in regulating business freedom, such as in the context of the CAP.

The Court's deviation from its earlier deferent stance reveals the Court's ‘forceful’ approach towards the freedom to conduct a business, interpreting the freedom to conduct a business as setting a baseline for corporate operations rather than, as Gill Pedro would argue, ‘in accordance with Union law and national laws and practices’. ¹³⁵ The Court's stance effectively curtails Member State democratic decision-making, establishing its own parameters for market intervention through Article 16 of the Charter and building minimum conditions into the market for companies’ freedom to operate.

This is also in line with Advocate General Cruz Villalón's explanation in its opinion to Alemo-Herron of the interests shielded by the freedom to conduct a business. According to the Advocate General, Article 16 of the Charter protects ‘(…) certain minimum conditions for economic activity in the internal market. Thus, Article 16 acts as a limit on the actions of the Union in its legislative and executive role as well as on the actions of the Member States in their application of European Union law.’ ¹³⁶ While, according to Advocate General Cruz Villalón, these certain minimum conditions are ‘obviously within limits’, ¹³⁷ the Court construes, in reality, a strong economic freedom while creating uncertainty about what precisely these minimum conditions would be.

Such reading of the freedom to conduct a business closely relates to the apprehension of the ‘abuse’ of democratic powers as expressed by ordoliberals, ¹³⁸ a sentiment that Heller interestingly coined as authoritarian liberalism. ¹³⁹ These interpretations of Article 16 of the Charter significantly limit the capacity of national polities to impose market regulations for the social or religious protection of workers without discriminating between cross-border and domestic market participants. By setting minimum conditions for economic activity within the internal market, the Court restricts Member States’ sovereign powers to manage their economies and regulate business freedoms according to their own view of the appropriate balance between the ‘state’ and the ‘market’.

While it could be argued that the freedom to conduct a business protects the fundamental interests of rights holders and justifies intervention in Member State policymaking during the implementation of EU law, it raises the question of which specific interests Article 16 of the Charter should protect. Garben, in that regard, has suggested that this freedom should merely protect individuals in their entrepreneurial goals and should not provide a ‘sword for companies’ to challenge the normative social prerogatives of Member States. ¹⁴⁰

Despite that being a fundamental problem, it is equally problematic that the Court's overall approach to the freedom to conduct a business is not uniform across different policy areas. While the Court typically exercises restraint in other EU legal policy areas, it appears to exceed its discretion in certain cases when balancing Article 16 of the Charter against employees’ rights and interests. Furthermore, within the specific domain of labour law, the Court reaches different conclusions regarding the content of this freedom, as illustrated by the judgments in Alemo-Herron and Werhof, or even Achbita and WABE. Overall, this incoherency leads to ambiguity regarding the actual scope and content of the freedom to conduct a business and the Court's interpretative methodological approach.

Future case law will be instrumental in clarifying the role and extent of the freedom to conduct a business within the EU legal framework, as the Court continues to navigate the complex interplay between economic freedoms and social protections.