Part III
Substantive Law

18. Internal Policies: An Overview  


The European Union began its life as a purely economic union. When born in 958, its principle task was to ‘establish … a common market and progressively approximate … the economic policies of Member States’. The creation of the common market thereby included, in particular, the establishment of ‘a system ensuring that competition in the common market is not distorted’. Yet outside the few additional economic areas covered by the 1958 Rome Treaty, the Union seemed powerless.

This picture began to change in 1972, when the Member States decided to expand the spectrum of positive Union policies. This expansion was originally based on the Union’s general competences: Articles 115 and 352; and on the bases of both provisions, several ‘flanking policies’ gradually developed. (These policies were so called because they were said to only ‘flank’ the establishment of the internal market.) Starting with the Single European Act, the Union was indeed given ever more specific competences in ever-wider fields. These express
competences can today be found in Part III of the TFEU entitled ‘Internal Policies and Internal Actions’ (see Table 18.1).

No textbook can – of course – provide a meaningful overview of all 24 internal Union policies. Yet what a textbook should do is to offer a compass through the substantive law of the Union. For not only are most cases discussed in this book – even the most ‘constitutional’ ones – embedded in a substantive policy area, the great majority of Union legislation deals with a specific ‘policy’, and that policy provides the substance with which European citizens – buyers, employees and consumers – primarily come into contact.

Five of the 24 internal Union policies have already been discussed in the previous chapters: the four fundamental freedoms (Titles I–IV) were discussed in Chapters 13–16, while European competition policy (Title VII) was discussed in Chapter 17. This chapter wishes to add a – brief – overview of four policy areas that have come to also significantly affect the lives of European citizens. Section 1 provides an introduction to the Union’s Economic and Monetary Policy. This policy is not only responsible for the creation of a common European currency – the euro – which has become a leading world currency; it recently provoked enormous controversy over the powers of the European Union to interfere with national economic choices. Section 2 moves to ‘Social Policy’. This is an important internal policy for a continent that prides itself as being the ‘social continent’. Section 3 then explores the Treaty Title on ‘Consumer Protection’, which has had an enormous impact on national contract laws. Section 4 looks – finally – at the Union’s regional or cohesion policy. With €325 billion at its disposal, this policy represents one-third of the Union budget and is tremendously important in creating a Europe that recognises its ‘regions’ as a third level of government below the Member States.

Economic and Monetary Policy

  1. Economic Policy: Coordinating the Member States
    1. The Stability and Growth Pact and Beyond
    2. Financial Assistance: Prohibitions and Conditions
  2. Euro-membership: Differential Integration
  3. Monetary Policy: Price Stability
  4. Supervisory Function: Financial Stability

Social Policy

  1. Social Policy: Competence and Procedure
    1. Union Legislation: Article 153 – Scope and Nature
    2. Private ‘Legislation’: Agreements between Social Partners
  2. Employment Legislation I: Protection at Work
    1. General Principles
    2. Atypical Work
  3. Employment Legislation II: Protection against Dismissal
    1. Substantive Guarantees: The Transfers of Undertakings Directive
    2. Procedural Guarantees: The Collective Redundancies and Insolvency Directives
  4. In Particular: The Equal Pay Principle
    1. Pay Discrimination: Direct and Indirect Forms
    2. Beyond Pay: Equal Treatment and Positive Action

Consumer Protection

  1. Forming Contracts: The Consumer Rights and Sales Directives
  2. Policing Contracts: The Unfair Terms Directive
  3. Policing Business: The Unfair Commercial Practices Directive
  4. Sanctioning Business: The Product Liability Directive

(Regional and) Cohesion Policy

  1. The European Regional Development Fund
    1. Objectives and Regions
    2. Administrative Principles and Implementation
  2. The Cohesion Fund


  1. Ex-Art. 2 EEC. 
  2. Ibid., Ex-Art. 3(f). From the very beginning, the Union was also charged to build ‘a common policy in the sphere of transport’ (see ex-Art. 3(e)), and to create a ‘European Social Fund in order to improve employment opportunities for workers’ (see ex-Art. 3(i)). 
  3. A. Giddens et al. (eds.), Global Europe, Social Europe (Polity, 2006); F. Scharpf, ‘The European Social Model’ (2002) 40 Journal of Common Market Studies 645.