The Transformation of Private Law Through Competition

• Date: 01 September 2016
• Published date: 01 September 2016
• DOI: http://doi.org/10.1111/eulj.12194
• Author: Hans‐W. Micklitz

The Transformation of Private Law Through

Competition

Hans-W. Micklitz*

Abstract: Thispaper traces the changing role of competition and its effects on privatelaw in

three differentstages of the Internal Market project:(1) the promotion of competition in the

original Internal Market both via contracts (competitive contract law) and through compe-

tition among legal orders (Common European Sales Law); (2) the suspension of competi-

tion in the face of financial crisis; and (3) the revitalisation of competition in the Digital

Single Market. Private law —broadly understood as regu latory private law—is being

deployed to achievecompeting, if not conflicting,policy goals. At this stage, it is not possible,

nor would it be desirable, t o provide a coherent account of these phenomena. Clear- cut

overarching values cannot be identified either. Transformation through competition is just

another take on European experimentalism.

I Introduction: Clarification and Argument

The development of European private law follows the changing policy patterns of the

European Union (EU) itself. The most stable policy frame is the Internal Market project

which has paved the wayfor the development of different forms of European private law.

The completion of the Inter nal Market is driven through competition and regulation

under the overall design of economic efficiency. The crisis in 2008/2009 has added a

new layer to the debate. The Banking Union project, achieved largely through

secondary EU law, has reache d dimensions which come close to a revision of the

European Constitution. Instead of competition and efficiency, the Banking Union is

driven by financial stability as the overarching principle. It seems that financial transac-

tions are being put into an ever tighter jacket, which restricts the private autonomy of

creditors and debtors. Last but not least, the European Commission just launched its

new Digital Single Market Strategy which enhances regulatory competition between the

rules on digital transactions and the rules on analog transactions.

Before I go into a deeper analysis of the relationship between changing policy patterns

and European private law, there is a need to clarify what I mean by ‘transformation’,

‘private law’,and‘competition’.

1

The overall theoretical background to the concept of

‘transformation’is taken from the changing role and function of the nation state, for

which the European project could be taken as a blueprint and a laboratory.

2

The

* Professor of EconomicLaw at European UniversityInstitute in Florence, Italy.The author acknowledges the

support of theERC project on European Regulatory PrivateLaw ERC Grant Agreementno. [269722].

1

See G. Comparato,‘Public policythrough privatelaw, introductionto a debate on Europeanregulatory private

law’, in this issue.

2

H.-W.Micklitz, ‘Review articleon the philosophical foundations of EuropeanUnion law’,(2013)32Yearbook

of EuropeanLaw, 538-554.

European LawJournal, Vol. 22, No. 5, September 2016,pp. 627–643.

© 2017 John Wiley& Sons Ltd. 9600 Garsington Road,Oxford, OX4 2DQ, UK

and 350 Main Street,Malden, MA 02148, USA

interrelateddrivers behind the transformation of both the stateand private law are: (1) the

internationalisation of the economy together with its financialisation;

3

(2) advancements

in digital technologies;

4

and (3) the borderless society in which therights, duties and even

identities of citizens are no longer bound and shaped by the nation state alone.

5

Private law is understoodas being an integral part of economiclaw.

6

In this perspective,

traditional private law (the grand codifications and the common law) and regulatory pri-

vate law have to be kept distinct. Regulatory private law in Europe has emerged from

three waves of regulation: the regulatory state in the late 19th to early 20th centuries,

the welfare state in the second half of the 20th century, and the third wave triggered by

the Single EuropeanAct, which submitted private lawto the project of completing the In-

ternal Market.

7

The Internal Market project paved the way for adopting consumer con-

tract law directives and gave rise to the antidiscrimination principle.

8

It also promoted

the liberalisation and privatisation of former public services, an area now understood as

the field of regulatedmarkets, including telecommunication, postal services, energy (elec-

tricity and gas), transport (airlines, railways, ships, and buses) and health care—here re-

ferred to as the ‘silos’. Financial services have to be added to the regulated markets,

although due to the financialisation of the economy, they enjoy a particularstatus, which

heavily impacts the other regulated markets.

The third clarification refers to the use of ‘competition’in relation to private law. Here,

the influences of ordoliberalism have left their imprint on the EU until today.

9

‘Privatrechtsgesellschaft’

10

(or ‘private law society’) can only unfold within a competi-

tive environment that has to be shaped via public law (competition law) and compliance

guaranteed by national competition authorities to tame private power. The EU operates

via regulation, and the EU’s regulatory private law creates frictions in both directions,

both toward competition law and traditional private law. It might be used to promote

competition or to restrict competition. In this article, I aim to demonstrate how the

EU’s grip on competition and private law varies among three projects: the Internal

Market (where competition is promoted), the Banking Union (where competit ion is

3

R. J. Shiller,The New Financial Order,Risk inthe 21st Century (Princeton,2003). For a forceful critiquesee J.

Vogl, Das Gespenstdes Kapitals (Diaphanes, 2010/2011).

4

See the Communicationfrom the Commission to the European Parliament,the Council, the European Eco-

nomic and Social Committee and the Committee of the Regions, ‘A Digital Sing le Market Strategy for

Europe’, COM (2015) 192 final, availableat http://ec.europa.eu/priorities/digital-single-market/docs/dsm-

communication_en.pdf.

5

H.-W. Micklitz and Y. Svetiev, ‘The transformation of private law’, in H.-W. Micklitz, Y. Svetiev and G.

Comparato(eds.), ‘European Regulatory Private Law—The Paradigm Tested’,(2014)4EUI Working Paper

Series, 69-97, available at http://cadmus.e ui.eu/bitstream/handle/1814/ 31137/LAW_2014_04_ERPL_

07corr.pdf?sequence=3.

6

L. Raiser, Funktionswandel des Privatrechts (Mohr Siebeck, 1 971); Funktionswandel der

Privatrechtsinstitutionen :Festschrift f. Ludwig Raiser zu m 70.Geburtstag (Mohr Siebeck, 1974). F. Baur,

H.-D. Assmann, G. Brüggemeier, D. Hart and Ch . Joerges (eds.), Wirtschaftsrecht als Kritik des

Privatrechtrechts, (Äthenäum, 1980).

7

H.-W. Micklitz‚‘The visible hand of European priva tel aw’,(2009)28Cambridge Yearbook of European Law,

3-60.

8

R. Münch,European Governmentality:TheLiberal Drift of MultilevelGovernance (Routledge, 2010);N. Reich,

General Principles of EU Civil Law (Intersentia, 2013).

9

D. J. Gerber,‘Constitutionalizingthe economy: Germanneo liberals, competitionlaw and the “new”Europe’,

(1994) 42 AmericanJournal of ComparativeLaw,25-84.

10

Usefulfor non-German readers,St. Grundmann, ‘Regulatorycompetitionin European companylaw —some

differentgenius?’, in G. Ferrarini,K. Hopt, E. Wymmeersch(eds.), Capital Marketsin the Age of the Euro —

Cross-BorderTransactions, ListedCompanies and Regulation (Kluwer, 2002), at 561-595.

The Transformation of Private LawSeptember 2016

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