Chapter 7 Guidance on answering assessment questions

Challenging EU action or inaction

The EU operates a system of production licences, administered by the Member States, in respect of soft toys, in order to avoid the development of a soft toy mountain. The Council has recently issued a Regulation, which has immediate effect, permitting Member States to prohibit the grant of production licences in respect of cuddly toy penguins.

The two EU producers of cuddly toy penguins wish to challenge the Regulation. Do they have locus standi to do so?

Article 263 TFEU provides that as non-privileged applicants, individuals and companies may challenge only certain Community acts, and then only in certain circumstances. The producers in this case may challenge the Regulation only if they can show, first, that they are directly and individually concerned by it and, second, that it is not a genuine Regulation but is really a disguised Decision.

In order to show direct concern, the producers must show that the act (the Regulation) had an effect on them (prohibited from producing goods) without any intervening action (UNICME v Council (Case 123/77 [1978] ECR 845)). Such intervening action has typically been in the form of a Member State’s discretion in implementing the measure. However, where the Member State has already notified the applicant as to how it would implement the Community measure if such a measure were issued, that measure will directly concern the applicant because the Member State has already used its discretion (see Bock v Commission (Case 62/70 [1971] ECR 897) and Piraiki–Patraiki v Commission (Case 11/82) [1985] ECR 207)).

In the present case it does not appear that the discretion has been exercised by the Member States and therefore the two producers are not directly concerned. However, in the absence of definitive information, enquiries should be made as to whether the Member States in which the producers are based have expressly (Bock) or impliedly (Piraiki–Patraiki) exercised their discretion prior to the adoption of Regulation.

In order to show individual concern there are a number of possible tests. If the producers can show that all potential applicants in respect of the measure can be identified at the time it was passed, this will be sufficient to comply with the ‘closed class’ test. In Plaumann & Co v Commission (Case 25/62) [1963] ECR 95), the Court of Justice specified that the measure must affect the applicants as a result of certain attributes or circumstances which distinguished them from all others so as to identify them personally, just as if the measure had been addressed to them. In that case, a measure which affected clementine importers generally was held not to individually affect a particular clementine importer, since similarly, any future producer of soft toy penguins would be affected, and therefore the two producers do not constitute a closed class.

The two producers could argue that the measure should be annulled insofar as it applies to existing producers, since they are distinguished by a ‘factual’ test. In the case of Bock, the measure was annulled in-so-far as it applied to those who had already applied for import licences. Similarly, in Sofrimport SARL v Commission (C-152/88 [1990] ECR 1-2477), the Court of Justice accepted that a Regulation suspending import licences could be annulled in-so-far as it applied to producers with goods in transit. In this case, the measure could be annulled in-so-far as it applied to existing producers. However, in Unifruit Hellas v Commission (Case T-489/93) [1994] ECR 11-1201), on similar facts, the Court ruled that there was no individual concern because the Regulation there did not expressly require account to be taken of such producers.

It is arguable that, by its nature and scope, this is truly a Regulation as in Union de Pequeños Agricultores v Council (C-50/00 P [2002] 3 CMLR 1). However, since it is of individual concern to the applicant, it may be held to be a Decision as it applies to these producers (UPA).

In conclusion, although the producers are able to prove that they are individually concerned and, consequently, that the Regulation applies to them as if it were a Decision, they are not able to prove that they are directly concerned by it. Their Article 263 TFEU action would therefore be inadmissible.

Note: the question asks only about locus standi and therefore you should omit any consideration of the grounds on which the action might have been brought.