The Impact of Community Law at the National Level

Except for anti-competitive behaviour, regulatory activities are mainly confined to the national arena and the final decisions are still made by the authorities in the member countries. Also the new CRF in telecommunications recognizes that there are significant differences as regards competencies and resources of NRAs in the member countries.

Hence, the Commission does not prescribe a specific form of organization and leaves the implementation of regulatory policies to domestic authorities which possess an expertise in national markets.¹³⁷ By setting only broad regulatory standards and objectives, the Commission allows for regime diversity in the EU but at the same time hopes to create a level playing field through consistent monitoring and the possibility of legal recourse to the ECJ.¹³⁸

If we discuss the impact of new EU policies on the member states, we have to distinguish between two different logics. The first logic refers to the influence that formal and informal institutions at the supranational level exert on the preferences and options of governments in the member states in course of negotiations at the EU-level (cf. Eising and Jabko 2001). This covers, first, the institutional setting and the attribution of formal legislative powers that can change opportunity structures between proponents and opponents of a proposal. Second, it considers informal and formal norms that provide a framework in which strategies become viable and that a priori rule out certain options (March and Olsen 1998). The first logic further reflects on the possibility of issue linkages in the Council, depending on the level of vertical differentiation, which ranges from the working-group level to meetings of the heads of states. And finally, it posits that EU decision-making is structured via standardized decision-making procedures that facilitate

137 The Commission reviews NRA decisions to verify if they are consistent with the pricing practices of Articles 81 and 82 ECT. However, the procedures of this regulatory review seem to be time consuming and lack procedural clarity (Coen and Doyle 2000: 24).

138 What is characteristic of European infrastructure regulation is the fact that it is effected as a two-tier regulation (McGowan and Wallace 1996). While legislation predominantly concerns the EU-level, implementation and execution of regulatory provisions fall under the responsibility of the member states.

This is further catalyzed by the multilevel character of the legislative process itself. Thus, despite the separation between legislative and executive competencies among the EU- and the national level, there are various interactions between the two.

consensus finding and allow policy learning of national governments by spreading information about policy consequences (Eising 2002: 87).

All of these mechanisms can induce a change of policy preferences in the member states. They are based on the assumption that EU politics takes place in “a community environment established by a common ethos and high interaction density”

(Schimmelfennig 2003: 180). Such a conceptualization of the EU as a community environment emphasizes the informal, cultural side of EU institutions and the softer mechanisms of institutional effect and rule enforcement. Hence, more indirect forms of Europeanization refer to top-down mechanisms based on community values and norms that increase the legitimacy of a country’s preferences and its bargaining power. According to this logic, the CEECs should have imitated policies of the EU and thus of those countries with whom they thought to share common norms and historical ties.

Such a view of preference formation is contested by other theories of EU policy-making. Intergovernmentalism, for instance, assumes that member states define their interests mainly on the basis of their domestic situations and defend them vigorously in the negotiations at the EU-level.¹³⁹ It posits that national actors form their preferences in EU-level deliberations in response to their domestic economic situations or pressures exerted by influential national interest groups. In other words, preference formation is assumed to occur almost independently from interactions at the EU-level. Hence, concrete policy decisions are the outcome of agreements between the member states at the EU-level on the basis of relative power positions and mutual concessions (cf. Moravcsik 1998).

A second and somewhat different logic of Europeanization considers how Secondary legislation or court decisions at the EU-level impact on policies and institutions in the member states themselves. Holzinger and Knill (2004), for instance, argue that under certain conditions the interaction of regulatory competition and cooperation at the EU-level leads to national policy convergence. Basically, we can differentiate between various forms of policy convergence, i.e. the convergence of content, goals, styles, institutions or

139 According to this perspective, the legislative outcome of electricity liberalization in the EU could be viewed as the smallest common denominator between France, Germany and Britain, which all favoured a different mode of network access (Eising 2002: 85).

outcomes (cf. Bennett 1991; Héritier 2001a). The focus in this study is on the convergence of national regulatory regimes. While the levels of state ownership and competition reflect policy outcomes, namely those of privatization and liberalization, respectively, the level of NRA independence reflects the institutional structure of reregulation in a sector.

According to the second logic, Europeanization possesses an impact on at least two of the three characteristics that constitute a regulatory regime in network infrastructures.

First, liberalization is an element of European Secondary law with the goal of attaining full competition in national and cross-national markets. And second, the establishment of NRAs is explicitly demanded by Secondary law in telecommunications and electricity.

However, the third regime characteristic, privatization, is exempted from the competencies of EU institutions. Europeanization might nevertheless exert indirect pressure on the member states to privatize state-owned infrastructure companies through rules on state aids and merger control.

As a consequence, different levels of liberalization and reregulation in the infrastructure sectors of the member states can be interpreted as cross-national differences in the implementation of common EU legislation. However, despite the obvious effects of European regulatory cooperation on national reform policies, the mechanisms of this influence are not yet fully understood (Knill and Lehmkuhl 1999; Radaelli 2003).

Although Europeanization might promote convergence, obviously there is disagreement among political scientists on the concrete mechanisms of this process.¹⁴⁰ While some authors claim that convergence stems from the EU membership obligation to implement Directives or Regulations at the national level (cf. Cowles, Caporaso and Risse 2001; Knill 2001), others have linked policy convergence to pressures based on domestic factors (cf.

Radaelli 2003) or processes of horizontal policy diffusion (Schneider 2001b).

The different logics of Europeanization are also reflected in sectoral studies of infrastructure reform. In their analysis of the European electricity sector, Eising and Jabko (2001: 743) find that “[…] the formal and informal institutional dynamics of EU

140 Knill (2001: 221-225), for instance, argues that domestic institutional structures can explain much of the variation between Europeanization and domestic policies, irrespective of adaptational pressures.

negotiations induced preference changes and political realignments at the domestic level”.

Similarly, Schmidt (1997: 265) stresses the centrality of the Commission as the major promoter of liberalization in the domestic processes of regulatory reform, especially in the telecommunications and electricity sector. Other authors, however, are more sceptical about the role of the EU as regards regulatory reform. They argue that the impact of Europeanization is overemphasized and that national processes of infrastructure reform can better be explained by global deregulation pressures (Eliassen, Mason and Sjovaag 1999:

27; Schneider 2001b: 61).

Chapter 7 assesses the factors that might have caused differences in regulatory regimes across the CEEC-10, mainly the role of Europeanization, horizontal policy diffusion, and domestic variables. Since European top-down pressures, that is the requirement to transpose the acquis communautaire into national law, have been similar on each applicant country prior to accession, any difference in the level of liberalization or reregulation should be explainable either by preference change, policy transference from third countries, divergent actor interests or the mediating effects of national institutions. As studies on the implementation of EU environmental policy have demonstrated, varying domestic adaptation patterns can for instance be explained by the institutional (in)compatibility of European requirements and domestic structures (Knill 1998).