The European Commission on Wednesday 9 June launched an infringement procedure against Germany. The country has been accused of breaching ‘the principle of the primacy of EU law’ by the country’s constitutional court when it launched the Public Sector Purchase Programme (PSPP). Indeed, a court ruling sets a ‘dangerous precedent’ for the morality of EU law.
The German court ruled that according to German law, the European Central Bank program would be deemed as illegal unless the central bank can prove that the purchases were justified. The decision refers to a judgement made in May 2020.
Last year, more specifically in May, the German Federal Constitutional Court affirmed that the European Court of Justice acted above its powers, namely ultra vires, by supporting the European Central Bank’s bond-buying incentive program to moderate the economic impact of the coronavirus pandemic. The EU deemed the German court ruling as an opposition to the supremacy of EU law.
What will the European Commission do?
This latter formally informed Berlin last Wednesday that the EU was launching a legal proceeding concerning the matter. Indeed the commission stated that “The judgment of the German Constitutional Court constitutes a serious precedent, both for the future practice of the German Constitutional court itself and for the supreme and constitutional courts and tribunals of other member states”.
According to the Daily Telegraph, the legal measure might lead to huge fines. The first step of an infringement procedure is a letter of formal notice, indeed the German government has two months to reply to a letter of formal notice from the commission.
In the letter, the government has to list the possible solutions. If the commission decides that Berlin failed to act under its obligations according to the EU law, the case could end up in the EU’s top court.
It is of vital importance to understand that “EU law has primacy over national law”. Every decision made by the European Court of Justice is binding for member states’ authorities and that includes national courts.
It is, therefore, possible to affirm that the German court act was a violation of fundamental principles of EU law. As a consequence, this could threaten the integrity of EU law and open the possibility to a ‘Europe a la carte’.
However, an infringement procedure would not overturn the court’s ruling but it would simply put the German Government in an awkward position.
The PSPP program
This latter authorised the European Central Bank (ECB) to purchase sovereign bonds from governments. The main aim is to provide liquidity and stabilise the financial conditions in the eurozone. The program dates back to 2015 and started to control the aftermath of the European debt crisis. From 2015 to nowadays, it bought 2.3 trillion in debt.
However, it is worth mentioning that the program follows perfectly the policy of the monetary area and observes the principle of proportionality.
In conclusion, despite the program falls within the policy of the monetary area the EU decided to take legal actions against Germany.
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