"The European Court of Justice should declare that the Federal Republic of Germany has violated European law by subjecting planning services by architects and engineers to mandatory minimum and maximum rates through the Fee Structure for Architects and Engineers" - according to the Advocate General's statement to the ECJ in his Opinion on 28 February 2019.
1. Background
After the ECJ ruled a few years ago that the HOAI regulations violated the freedom to provide services, the HOAI price law is now being scrutinised against the background of freedom of establishment. The abolition of the binding price framework for architects' and engineers' fees regulated in the HOAI has been demanded by the EU Commission for over 4 years. The reason given for this is that the minimum and maximum prices of the HOAI violate the so-called Services Directive and are therefore inadmissible. Market access for service providers from other EU countries would be made practically impossible by free or - at least facilitating - pricing. *** Translated with www.DeepL.com/Translator (free version) ***
2. Initiation of proceedings by the Commission against the FRG
The EU Commission initiated EU infringement proceedings after obtaining answers from some member states to questions on national binding fee systems. The Federal Republic of Germany defended the fee regulations for architects and engineers. The Commission then drew the German authorities' attention to a possible infringement of the HOAI fee regulations against Art. 15(1), Art. 15(2)(g) and Art. 15(3) of Directive 2006/123 and Art. 49 TFEU. The Federal Republic of Germany countered that the regulation in question did not restrict the freedom of establishment. Even if it did, it was justified by overriding reasons in the public interest. However, this was not sufficient for the EU Commission and it brought an action.
3. Opinion of the Advocate General
In his Opinion of 28 February 2019, the Advocate General declared that the Federal Republic of Germany was in breach of Art. 15 (1), (2) (g) and (3) of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market (Services Directive). This is justified by the fact that planning services by architects and engineers are subject to mandatory minimum and maximum rates under the Fee Structure for Architects and Engineers (HOAI) (Advocate General at the ECJ, Opinion of 28 February 2019 - C-377/17). *** Translated with www.DeepL.com/Translator (free version) ***
It is true that consumer protection and the guarantee of a high level of quality are cited in principle as overriding reasons in the general interest in the Directive. However, the Federal Republic of Germany has neither demonstrated the suitability nor the necessity of the binding price framework. Instead of demonstrating that the current provisions of the HOAI are suitable for achieving a high quality of architectural and engineering services, it confines itself to general considerations and assumptions. The main argument - that increased price competition leads to a reduction in the quality of services - has not been adequately substantiated. There is also a lack of necessity, as the Federal Republic of Germany has not demonstrated that the effect of the provisions in question on minimum rates better guarantees the quality of a service and the protection of consumers. In particular, the statement that the introduction of an access regulation to the professions concerned would constitute a much greater restriction on the freedom of establishment than the current HOAI is a mere assertion that is not supported by evidence. Only if it were demonstrated that other measures that could ensure the quality of services as well as consumer protection did not achieve the objectives of quality of services and consumer protection could one, as a last resort, begin to consider whether minimum rates would better achieve these objectives.
4. What happens next?
It can be strongly assumed that the ECJ - as so often - will also agree with the Advocate General this time and thus declare a breach of European law by the HOAI. It will be interesting to see to what extent the Advocate General's Opinion already influences the German courts' HOAI-friendly line. According to the ECJ, it is already the task of the national courts to examine the compatibility of statutory provisions with the Services Directive (see ECJ, judgement of 30 January 2018 - Case C-31/16). This has now also been emphasised by the Advocate General. The Services Directive also has direct effect for private individuals. However, if the courts deny compatibility with the Services Directive, they would already have to leave the rules on the binding price framework unapplied. Minimum rate actions could then be unfounded (at the latest if the ECJ follows the Advocate General).
Maximilian Alber, Stuttgart
BREYER ATTORNEYS AT LAW
www.breyer-rechtsanwaelte.de
info@breyer-rechtsanwaelte.de
