Institutional design of enforcement in the EU: the case of financial markets

Traditionally, enforcing EU laws has been an autonomous responsibility of EU Member States and their national supervisory authorities. Yet, great differences in the powers, capacities, regimes and strategies of national supervisory authorities have resulted in inconsistencies and disparities in applying EU law at the national level. For instance, ‘in the banking sector the maximum amount of fines provided for in case of a violation is unlimited or variable in 6 Member States, more than 1 million euro in 9 Member States, less than 150 000 euro in 7 Member States’.1 This example shows not only that companies can be punished quite differently in different EU Member States arguably for the same wrongdoing but also that the incentives for the same company to violate an EU rule will vary and be at their highest in, to take the mentioned example, the seven Member States where the fine would be less than € 150,000. To mitigate the negative consequences from the integrated legal order enforcement tasks have become increasingly shared between the national and EU levels. Enforcement has become increasingly ‘Europeanized’.2 The sharing of enforcement tasks, to the extent that this has occurred in individual policy areas, has taken different institutional shapes, such as (informal) networks of supervisory authorities and EU agencies with and without legally-binding powers. In light of the existing variety of the ways in which enforcement tasks and responsibilities have been shared between the national and EU levels, this article aims to map out institutional models of how enforcement can be organized and to discuss what different models bring in terms of degrees of sharing and the dividing of tasks and, to a certain extent, the effectiveness of enforcement. It does so by means of comparing the existing institutional designs of shared enforcement in the area of the EU financial supervisory system. Identifying enforcement models is useful as it makes policy-makers at the EU and national levels aware of various possibilities and challenges that such models are likely to face. National and EU policy-makers are hence advised to consider the identified challenges in advance when making choices between different enforcement models. While this article derives its conclusions focusing primarily on the financial sector, the proposed models and respective analysis could be useful in searching for the most optimal models in various areas of shared regulation and enforcement in the EU