Rapporteur:

Christa SCHWENG

Advisors	Ulrike HASSMAN-VORBACH (for the rapporteur) Silvia BORELLI (for Group II)
Plenary Assembly decision	24.10.2024
Legal basis	Rule 52(2) of the Rules of Procedure
Section responsible	Single Market, Production and Consumption
Adopted in section	8.4.2025
Adopted at plenary session	30.4.2025
Plenary session No	596
Outcome of vote (for/against/abstentions)	190/6/3

1.   Conclusions and recommendations

1.1.

Respect for the rule of law is intrinsically linked to respect for both democracy and fundamental rights. There can be no democracy or respect for fundamental rights without respect for the rule of law and vice versa.

1.2.

The rule of law comprises a transparent, accountable, democratic and pluralistic legislative process and the protection, implementation and enforcement of fundamental human and social rights (1) as enshrined in the UN Treaty, the European Convention of Human Rights, the European Social Charter and the Charter of fundamental rights of the European Union.

1.3.

The EESC stresses that respect for and enforcement of fundamental rights and the rule of law are key elements in mutual trust between Member States. Investment and trade within the internal market can only work if all economic operators abide by the law and can rely on structures and behaviour by public authorities that respect the rule of law.

1.4.

Respect for the rule of law is therefore also a key prerequisite for economic activity, and thus a factor in a location’s attractiveness to businesses. Protectionist measures that treat domestic companies more favourably than those from EU countries go against the principle of equal treatment.

1.5.

The economic dimension of the rule of law is not adequately reflected in the European Commission’s Rule of Law Report, which is why the EESC advocates the inclusion of a fifth pillar.

1.6.

However, law enforcement in the internal market requires further efforts, since existing instruments such as infringement proceedings take an unreasonably long time for all market participants. Existing European Commission instruments for dealing with internal market infringements should be speeded up and greater use should be made of EU Pilot procedures. A strong and independent judiciary, well-resourced public services, and bodies for monitoring and reporting all breaches of the law are the only way of guaranteeing effective legal protection, and are therefore fundamentally important for the rule of law.

2.   General comments

2.1.

The Union is founded on the values enshrined in Article 2 of the Treaty on European Union (TEU): respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. ‘These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail.’

2.2.

The rule of law requires that public powers act within the constraints set out by law, in accordance with the values of democracy and respect for fundamental rights, and under the control of independent and impartial courts. It ‘requires, in particular, that the principles of legality (2) implying a transparent, accountable, democratic and pluralistic law-making process; legal certainty (3); prohibition of arbitrariness of the executive powers (4); effective judicial protection, including access to justice, by independent and impartial courts (5); and separation of powers (6), be respected (7) (8).

2.3.

While there is no hierarchy among Union values, respect for the rule of law is essential for the protection of the Union’s other fundamental values, such as freedom, democracy, equality and respect for human rights.

2.4.

The European Economic and Social Committee (EESC) has repeatedly pointed out (9) that “respect for the rule of law also ensures legal certainty and a level playing field for business initiatives, innovation, investments and fair competition across the internal market for the benefit of consumers and citizens”. This opinion deals with the protection of investments as an essential part of the economic dimension of the rule of law.

2.5.

Respect for and enforcement of fundamental rights and the rule of law are key elements in mutual trust between Member States. Investment and trade within the internal market can only work if all economic operators and civil society organisations abide by the law and can rely on structures and behaviour by public authorities that respect the rule of law. This includes ensuring fair competition – and for this, high labour law standards need to be secured by tackling social dumping and undeclared work (10) – and protecting consumer, civil and social rights, both within each Member State and in the cross-border context. Compliance with applicable legislation is the responsibility not only of the authorities, but also of all market participants.

2.6.

However, the rule of law serves not only to safeguard individual rights, but also to protect the collective interests of society. If the state fails to act in the event of misconduct by individual market participants, this leads to misallocations that have a negative impact on companies, workers and the public, thus undermining trust in the state. This not only threatens fair competition between companies, but also deprives workers of social protection and the tax and welfare systems of necessary revenue. The EU’s internal market should benefit consumers and citizens by ensuring fair competition, economic growth and access to high-quality goods and services.

2.7.

Companies that operate across borders stress that the reliability and credibility of political and legal frameworks are of crucial importance to their investment decisions, and criticise the lack of political stability in certain systems of government, the unpredictability and short-notice enactment of legal regulations, discrimination against foreign investors, the length of procedures, and the lack of reliability in enforcement of the law.

2.8.

A strong and independent judiciary that guarantees legal protection and enforcement for all those subject to the law is – together with well-resourced public services – fundamentally important to the rule of law. EU Member States must commit to sustained investment in justice systems, law enforcement agencies, labour inspectorates and other public institutions that ensure legal certainty, access to justice and the enforcement of rights. Underfunding these institutions leads to weak enforcement, legal uncertainty and a decline in trust in democratic institutions.

2.9.

Respect for the rule of law is a key factor in a location’s attractiveness to businesses: if protection for cross-border investments in the internal market is weak, this may have an adverse effect on the freedom to conduct a business (Article 16 of the Charter of Fundamental Rights of the EU) and the right to property (Article 17 of the Charter).

2.10.

In this opinion, the EESC presents some examples of behaviour that undermines the rule of law, and outlines solutions to address these breaches of the rule of law.

3.   Examples of protectionist and discriminatory behaviour that subvert the rule of law

3.1.

The following examples have been reported to national and European employers’ associations by affected companies. For some of them, internal market complaints have been lodged and/or infringement proceedings initiated, while in other cases companies have decided not to contact public complaints bodies for fear of being disadvantaged further.

3.2.

Special taxes have been introduced (11) (12) that in practice only affect foreign investors, by linking the tax base to a level of net turnover or excess profit that only foreign companies exceed.

3.3.

Large fines are levied for minor infringements (13), while at the same time the suspensive effect of appeals has been abolished in certain sectors.

3.4.

Authorisation for foreign investors to acquire land and construct a shopping centre has been withdrawn after completion and the project has been threatened with demolition, meaning that the protection of investors’ legitimate expectations is being undermined by state practices (14).

3.5.

National creditors and suppliers of ‘systemic importance’ (15) are being favoured over foreign companies, violating the principles of equal treatment and non-discrimination, as well as those of legal certainty and protection of legitimate expectations.

3.6.

Takeovers are being prohibited at short notice by means of emergency decrees (16).

3.7.

Foreign companies are disadvantaged in tender procedures for the public allocation of certain raw materials, by being allocated smaller quantities than they are legally entitled to based on the size of their operations (17).

3.8.

Exports of raw materials that have been permitted for years are banned at short notice (18). The bans are then withdrawn before they are reviewed.

3.9.

Prices for certain goods are capped (19) (20) just for companies above a certain net turnover that only foreign companies reach.

3.10.

Tax laws that only affect foreign companies are enacted retroactively (21).

3.11.

In addition to the above-mentioned practices, the following approaches have also been observed: — Emergency measures are issued at short notice, and are then cancelled if they are challenged in the courts. As infringement proceedings often take several years, the law is no longer in force by the time a judgment is issued, and the case is closed (22). — Politically motivated criminal charges for money laundering (23) are brought against owners of private investment funds with the aim of forcing them out of the market. This can harm foreign investors. Prosecutors who initiated these politically motivated cases are now conducting their own reviews. — Member States issue or do not withdraw A1 forms for workers who are not posted any more or no longer come under their social security system.

3.12.

All these examples violate the fundamental right to equal treatment by adopting protectionist measures that treat domestic companies more favourably than those from EU countries. Bilateral agreements between individual Member States and third countries may result in companies from other EU countries being treated less favourably than non-EU companies. Both situations lead to a loss of trust between market participants and thus to erosion of the internal market. Third-country companies should only be granted access to the internal market on the basis of reciprocity and provided that they comply with the applicable legislation.

4.   Enforcement

4.1.

European directives not only have to be transposed into national law by the Member States; people also have to be able to enforce them. In line with the principle of the separation of powers, this requires an independent judiciary that is in a position to oversee state action.

4.2.

For the internal market, SOLVIT was created as a voluntary tool for private individuals, (mobile) workers and businesses to use to complain when they are disadvantaged in a cross-border context through the actions of a public authority that is not complying with EU law. However, only six Member States (24) are managing to resolve cases within one year; all the others are failing to meet this target.

4.3.

The maximum duration of an internal market complaint before an infringement case is taken to the CJEU should be 36 months (25); in reality, these cases take an average of 49 months (26). Recently, the European Court of Auditors criticised the fact that, while the EU Pilot procedure – i.e. informal dialogue between the Commission and the Member States on complex issues – did usually find a solution that avoided formal infringement proceedings, such cases took an average of more than two years. It also said that an increasing number of formal infringement proceedings were taking too long, and that, while it was true that most cases were resolved without the Commission needing to resort to financial sanctions, in some cases EU countries had not rectified breaches despite being sanctioned for years.

4.4.

The persistent problem of corruption, and of impunity for unlawful acts, continues to undermine the rule of law throughout the internal market. Although legislation is in place, its uneven application allows certain actors to disregard legal norms without any consequences. It is crucial to strengthen monitoring mechanisms and enforcement to ensure that those who do not abide by the rules are held accountable. The EU must take more rigorous action against actors – whether public or private – who exploit legal loopholes, circumvent sanctions or undermine democratic principles. This applies in particular to tax avoidance schemes and the circumvention of social rights, e.g. through letterbox companies or long subcontracting chains, where they serve the purpose of concealment.

4.5.

Legal protection and enforcement of the law are also key elements for workers and consumers. Access to justice enables individuals to protect themselves against infringements of their rights, to remedy civil wrongs, to hold executive power accountable and to defend themselves in criminal proceedings. Currently, access to justice is still hampered by many obstacles, especially for migrants and mobile workers.

5.   Monitoring the rule of law

5.1.

Since 2020, the European Commission has published an annual rule of law report, monitoring developments in the rule of law in Member States. It covers four pillars: the judicial system, the anti-corruption framework, media pluralism, and other institutional checks and balances.

5.2.

While all of these pillars have an impact on the economy, the cases referred to in section 3 of this opinion do not fit into the four pillars of the Commission’s report. Commission President Ursula von der Leyen announced in her political guidelines for the current term that a Single Market dimension would be added to the rule of law report to address rule of law issues affecting companies, especially SMEs, operating across borders. To implement this, the European Commission proposed, in the consultation on the 2025 Rule of Law Report (27), expanding the individual chapters of the report to include economic aspects and adding a specific thematic focus to the introductory communication. The EESC takes the view that a separate chapter should be devoted to the economic dimension of the internal market.

5.3.

It is unacceptable to businesses, workers, consumers and the general public that their rights in the internal market cannot be enforced because of the length of proceedings. Complaints also often come to nothing because states rescind the law against which the complaint is lodged, which means there is no legal basis for the complaint or any resulting compensation claims. Such an approach could be prevented if rescinding a law did not lead to the termination of infringement proceedings before the CJEU. It would also be desirable for the European Commission to adhere to its own benchmarks of 36 months for infringement proceedings.

5.4.

Commissioner Michael McGrath’s mission letter mandated him to set up a civil society platform ‘to support more systematic civil dialogue and work to strengthen protection of civil society, activists and human rights defenders in their work’. The EESC reiterates its belief (28) that it must be involved in the governance of such a platform and be a key part of it, as a Treaty-based body tasked with consulting business associations, trade unions and organised civil society. Based on the experience of its FRRL group (29), as well as on other examples of participatory procedures it has organised, the Committee can be an ideal conduit for the views of organised civil society in these areas. The EESC emphasises that high-quality dialogue goes beyond mere consultation. It calls for the economic dimension of the rule of law to be addressed in such dialogue too.

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(1)  UN treaties (e.g. Universal Declaration of Human Rights, International Covenant on Economic, Social and Cultural Rights), Treaty on European Union, European Convention on Human Rights, revised European Social Charter and EU Charter of Fundamental Rights; ILO conventions.

(2)  Judgment of the Court of Justice of 29 April 2004, CAS Succhi di Frutta, C-496/99 P, ECLI:EU:C:2004:236, paragraph 63.

(3)  Judgment of the Court of Justice of 12 November 1981, Amministrazione delle finanze dello Stato v Srl Meridionale Industria Salumi and others Ditta Italo Orlandi & Figlio and Ditta Vincenzo Divella v Amministrazione delle finanze dello Stato. Joined cases 212 to 217/80, ECLI:EU:C:1981:270, paragraph 10.

(4)  Judgment of the Court of Justice of 21 September 1989, Hoechst, Joined cases 46/87 and 227/88, ECLI:EU:C:1989:337, paragraph 19.

(5)  Judgment of the Court of Justice of 27 February 2018, Associação Sindical dos Juízes Portugueses v Tribunal de Contas C-64/16, ECLI:EU:C:2018:117, paragraphs 31, 40-41; Judgment of the Court of Justice of 25 July 2018, LM, C-216/18 PPU, ECLI:EU:C:2018:586, paragraphs 63-67.

(6)  Judgment of the Court of Justice of 10 November 2016, Kovalkovas, C-477/16, ECLI:EU:C:2016:861, paragraph 67; Judgment of the Court of Justice of 10 November 2016, PPU Poltorak, C-452/16, ECLI:EU:C:2016:858, paragraph 35; and Judgment of the Court of Justice of 22 December 2010, DEB,C-279/09, ECLI:EU:C:2010:811, paragraph 58.

(7)  Communication from the Commission “A new EU Framework to strengthen the Rule of Law”, COM(2014) 0158 final, Annex I.

(8)  Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime of conditionality for the protection of the Union budget (OJ L 433 I, 22.12.2020, p. 1).

(9)  Opinion of the European Economic and Social Committee on “The rule of law and its impact on economic growth” (Own-initiative opinion) ( OJ C 429, 11.12.2020, p. 16).

(10)   Undeclared work accounts for an alarming 20 % of the private sector in some Member States.

(11)   Case INFR(2024)4022.

(12)   Case C-144/24.

(13)  Cases INFR(2020)4004 and INFR(2020)4013.

(14)  There has been correspondence on this matter, but no publicly accessible source is available for reference.

(15)  Cases INFR(2020)4004 and INFR(2020)4013.

(16)   https://www.handelsblatt.com/27073368.html, Vienna Insurance Group completes acquisition of Aegon companies in Hungary.

(17)   INFR(2022)4108.

(18)   EUR-Lex - 62023CC0499 - EN - EUR-Lex.

(19)   Case C-557/23.

(20)   Case C-658/24.

(21)  NIF 2012/4092 (discontinued, as the law has expired).

(22)   INFR(2022)4108.

(23)  Open Dialogue Foundation, https://en.odfoundation.eu/?s=poland#.

(24)   https://single-market-scoreboard.ec.europa.eu/enforcement-tools/solvit_en.

(25)   https://www.eca.europa.eu/en/publications/SR-2024-28.

(26)   Infringements | Single Market Scoreboard .

(27)   Consultation document.

(28)   OJ C, C/2025/1184, 21.3.2025, ELI: http://data.europa.eu/eli/C/2025/1184/oj.

(29)   Ad-hoc group on Fundamental Rights and the Rule of Law.