Administrative Law and Market Regulation, RUG 23-24

3 main issues of market regulation

1: What is the GOAL OR OUTCOME to be achieved by the regulation? 2: What STANDARD OF CONDUCT is required from market participants? 3: What ENFORCEMENT techniques are appropriate to ensure compliance?

Principles-based regulation

Broad purposive rules that may or may not be elaborated upon in further rules. They are the foundation of other rules, acting as a guide to their interpretation and application. Regulators work on ensuring regulatees reach these purposes / principles. Main consideration is the outcome, the SPIRIT of the law. (e.g. Investor Protection Regulation, general duty of care of financial service providers) PROS: ensures that regulatees attain the purpose of the regulation, rather than technical details. CONS: given how broad these rules are, they may be used by companies to increase profits, and not further public interests; puts demands on the capacity of public regulators AND regulatees.

Types of public authorities

Central Government Level: types of ministries functioning at central level of gov. Lower Levels of Government: provincial and regional branches of gov, including municipalities. They manage local areas, as the central gov cannot handle every little detail itself. Regulatory Agencies: specialised agencies that regulate specific markets, maintaining checks on compliance. They have expertise in the area and help the government manage specialised markets.

Public enforcement of EU consumer law

EU has led to specific administrative agencies being established to protect consumers, particularly using administrative means. Criminal law may still be used on a domestic basis, despite how costly it is on taxpayers. MINIMUM powers are given to admin agencies, and MS's get requirements as to what the appropriate administrative sanctions should look like. Unfair Commercial Practices Directive: APPROPRIATE ADMIN. SANCTIONS should involve max of at least 4% of the trader's annual turn over in the MS concerned. Criteria to consider when imposing penalties include: nature, gravity, scale and duration of the infringement; action taken by the trader to remedy the damages; previous infringements by the trader; financial benefits gained / losses avoided by doing it; penalties on the trader for the same thing in other MS's; other aggravating or mitigating factors. Helps to ensure at least some harmonisation of fines. How should member states implement those directives that oblige them to ensure private law enforcement? OPTION 1: implement the directive completely into national public law. OPTION 2: Implement some substantive rules into national private law, with reference to them in public law. OPTION 3: implement them in a special legislative act that combines both public and private law elements. (Consumers in MS's should be able to seek compensation and invoke other private law remedies!) Implications? a move towards European supervision private law.

Multi-level system of governance (EU)

EU law's relationship with national law: EU laws have supremacy, but still EU law relies greatly on national law for the achievement of its aims (e.g. by issuing directives).

What goals should be considered when regulating financial services?

European market integration financial stability orderly functioning and integrity of financial markets consumer / client protection sustainable development

What goals should consumer transaction protection concern?

European market integration > creating a level playing field via lots of harmonisation. Consumer protection > correcting market failure that results from info asymmetries, + ensure interpersonal justice bw parties for the intrinsic value. Sustainable production and consumption > push forward progress and innovation to be more environmentally friendly.

Does coordination exist between public and private enforcement in EU consumer law?

It is underdeveloped, given that civil courts are NOT generally bound by administrative decisions (except via competition). They can use those decisions as evidence, but then come up with their own final decision, at which point they are not bound by domestic competition authorities' decisions.

The Legal Matrix

Relationships between private parties are no longer solely governed by national private law. Now, both EU and national public law affect them as well, from regulation and implementation to enforcement.

How are principles of good administration relevant in practice?

They underline Standards of and Rights to good administration. This is the most convincing way to view it.

Private enforcement in EU financial law

Types of action possible for aggrieved parties: INDIVIDUAL action > civil courts or alternative dispute resolution bodies. (KiFID in NL, FOS in UK) COLLECTIVE action > civil courts, e.g. WAMCA in NL. Woekerpolis scandal indicated law firms can specialise in consumer claims, e.g Consumentenclaim. EU created FIN-NET. Overall, EU fosters Alternative dispute resolution via directives and by providing venues for cross-border disputes. In collective action, they allow qualified entities to bring a representative action before civil court (Representative Actions Directive).e

Product safety standards

via the EU product safety regime, the Union ensures that only SAFE products can be placed on the market via this general safety standard. Uses CO-REGULATION, where private orgs set harmonised technical standards within this public regulatory framework (e.g. CEN). The product is presumed safe when complying with these privately made technical standards. This is the general rule. Main responsibility on manufacturers. Recall actions can occur. Product safety occurs ex ante. (e.g. Toyota airbag recall)

Command and control regulation

'bright line' rules that are specific, prescriptive legal rules that leave near no room for varying interpretation. Tends to be backed by strict administrative or even criminal fines. (e.g. speed limits, Covid lockdown rules, requirement for authorisation) PROS: easy to enforce; legal certainty for public regulation and regulated persons. CONS: excessively detailed, quickly outdated; formalistic and aggressive enforcement; persons get creative in circumventing the law.

The Administrative Procedure

1: An administrative decision is issued to you by the administrative authority and you disagree with it. 2: You submit a statement of objections to the authority to initiate an administrative appeal. Here, the (same!) authority checks all the factual and other information in the case again and reviews whether the decision was good. 90% of cases are handled at this stage. Additionally, law firms work with the gov to help advise with regards to these appeals, giving insight into what's in accordance with law, what falls in their discretion, etc. 3: If still unhappy, the individual can go to court for judicial review (see another flashcard).

How can public / private law be used in the context of market regulation?

1: how to effectively regulate unfair commercial practices in the EU? Determine the goal / outcome to be achieved. 2: How can this goal be achieved? by setting the standard of conduct required from market participants. 3: How to enforce the prohibition? 3 main techniques: public (admin law), private, and collective enforcement (by qualified entities)

European regulatory private law

= a body of EU secondary law which affects relationships between PRIVATE parties, regardless of whether the law itself is (transposed in) public or private law. This has emerged in the pursuit of market integration and the establishment of the internal market. National law should be harmonised to the extent that it facilitates the internal market, helps to prevent market failures and creates a LEVEL PLAYING FIELD for businesses, good consumer protection etc. Challenges include digitalisation and sustainability, as only national rules will not be enough to combat that.

European supervision private law

= a body of regulatory 'conduct of business' rules of EU origin which should be observed by firms when dealing with (potential) clients is subject to public enforcement. Therefore, this covers the relationship between a specific business and a public regulatory agency, while simultaneously setting standards for the relationship between businesses and their clients. Main characteristics include: regulatory in nature; ex ante standard setting; developed outside of traditional private law system; monitoring and enforcement is by public authorities. NOTE: Citizens cannot be left alone to handle getting justice, as they are usually too weak and unexperienced with what's happening in the markets. So it must be public enforcers that handle this to some extent.

Private enforcement (general)

About enforcement of regulatory standards by PRIVATE PARTIES through PRIVATE LAW MEANS. This entails civil liability, horizontal relationships and the ability to take claims to civil court. Functions ex post, seeking compensation for victims. Private enforcement is either INDIVIDUAL or COLLECTIVE (ppl in groups), and either occurs as JUDICIAL (claims in civil courts) or EXTRA JUDICIAL (outside of court, before alternative dispute resolution body). PROS: combination of compensation in pursuit of private interests (further interpersonal justice), while still possibly serving deterrence; acts as an extra check on the integrity and competence of public enforcers; financed by private parties. CONS: private parties go after private interests; private parties may lack incentives to sue; insufficient info gathering capacity.

Hybrid enforcement in EU consumer law

About the enforcement of admin authorities in providing redress. There are two modalities, complementarity and integration. Fake dating sites are a good eg. of how hybrid enforcement can bring compensation to a big group of harmed consumer (e.g. dating site that harmed 37,000 ppl, and Autoriteit Consument & Markt said they would not press charges if the company agreed to setting up their own compensation for their wrongdoings. Consumer protection authorities tend NOT to have explicit powers to order a trader to provide compensation against the trader's will. Another option is that administrative agencies can initiate redress settlements or bring collective action before civil courts.

Public enforcement (general)

Based on the supervision and enforcement of regulatory standards by PUBLIC AUTHORITIES through PUBLIC LAW MEANS. This means that administrative and criminal law are often involved. PROS: concerned with reaching public interests; public authorities have better info gathering powers; public authorities have the ability to a just the enforcement strategy to achieve the ideal level of deterrence. CONS: public authorities may be captured (regulatory capture); have a limited capacity to enforce; high public costs involved. 3 occasions for regulatory conversations between regulators, regulated and regulatees: regulatory authorities may give guidance and waivers as to the application of rules in their primary legislation (e.g. ESMA); supervised rule formation (a firm is in touch with a regulatory agency that helps them apply the law); monitoring and enforcement. Enforcement styles may vary: PENAL STYLE: enforcement is reflective, consisting of applying certain sanctions to prevent repetition of wrongful behaviour. Law is a threat. CONCILIATORY STYLE: enforcement is prospective, a matter of responding to a problem and negotiating a solution. Involves reliance on bargaining. These two styles are opposite sides of spectrum of punishment and persuasion. Relevant factors for both are legal design, task environment, political environment, leadership etc. The ENFORCEMENT PYRAMID is a compromise approach that marks a process wherein enforcers should start with conciliatory enforcement, and then gradually build up to penal. However, concerns include that the pyramid may not align with constitutional values, e.g. procedural fairness and proportionality.

Why regulate consumer transactions?

Because of the harm that existing information asymmetries and imbalance of bargaining power between companies and consumers. Product Life Cycle: Extraction / processing; manufacturing; distribution; use; disposal. Business to Consumer (B2C) Relations:: Consumer = natural person acting outside of expertise. Business = natural / legal person acting within their expertise. Producer / manufacturer = extra-contractual relationship w/ consumer. Distributor / seller = pre-contractual relationship w/ consumer.

Private regulators

Bodies that can never qualify as public authorities, and still regulate to some extent. This authority comes from: Statutory mandate (e.g. APK rule in NL). Contractual mandate (contract delegating certain tasks to bodies that can't be public reg's; e.g. Grenfell Tower Fire). No source (practices that become a source of authority, ie Customary law; e.g. Milieudefensie v Shell).

Can citizens complain about maladministration?

Citizens can go to their OMBUDSPERSON - person you go to when you think the standard of administration was not reached. Every EU MS has one, and within countries there can also be regional ombudsperson institutions around the world. Specialized institutions: Veterans Ombudsman (Canada), Anti-corruption and civil rights commission (Korea). To be seen as actually powerful, ombudsperson institutions should meet these criteria: They maintain independence from gov; maintain neutrality and respectability; high standard of democracy; media support; recognition of the ombudsman institution. Ombudsman institution as "an investment in good governance in a country"

Regulatory techniques

Command and control regulation and (Based on J. Black's research:) the New Governance Regulatory Techniques: principles-based regulation, meta-regulation, enrolment of gatekeepers, risk-based regulation. They straddle the continuum between private ordering and state intervention, involving both public and private actors. Traditional and 'new governance' techniques are commonly combined and mixed together in an attempt to create the most effective approach possible.

The European System of Financial Supervision (Public enforcement in EU financial law)

Consists of two components: European Supervisory Authorities (ESAs) and the European Central Bank (ECB) ESAs > national admin authorities that take over supervising the financial industry, using admin and (sometimes) criminal law. ECB > a closed off body that is in charge of prudential supervision, particularly w/ regard to micro and macro-credential aspects. (NOTE: these bodies are important to have in financial law given the number of scandals and risks to the well-being of the economy as a whole.) European Supervisory Market Authority (ESMA) > aims to improve functioning of the internal market via ensuring consistent supervision. Wants to increase integrity, transparency, efficiency and orderly functioning. ESMA helps to strengthen international supervisory coordination while preventing regulatory arbitrage. e.g. DE Wirehard Scandal; ESMA called out the issues present at the national level, prompting national authorities to resolve insufficiencies given external pressure. ESMA has consumer protection powers of: developing draft regulatory technical standards; adopting guidelines + recommendations for safety and soundness of markets; issue warnings in event that financial activity poses a serious threat; temporarily prohibit or restrict certain financial activities. ESMA can TEMPORARILY INTERVENE PRODUCTS if 4 conditions are met: there is a significant investor protection concern or threat to functioning / integrity of internal market; risk is not sufficiently addressed by existing regulatory requirements; measure is proportionate; no adequate national measures have been taken yet.

Conduct of Business regulation in the EU

Consumer Credit Directive 2008: no obligation to give a loan to a lending so long as information requirements are met. So, no matter what the lender needs to assess the lending person's creditworthiness and at the end the consumer still has the right of withdrawal. This is SOFT paternalism. Key regulatory Tools: information requirements for lenders, lender's duty to assess consumer's creditworthiness, consumer's right to withdrawal (situation that led to this directive was the rise of Payday Loans).

Information requirements

Consumer rights directive 6(1): long, ineffective description that's ineffective in communicating the rule in an understandable way. Info requirements tend to lack clear remedies and take the form of info overload. Often is public regulation.

3 Building blocks of conduct of business regulation on the paternalistic continuum (soft to hard)

DISCLOSURE REGULATION: softest regulation; information requirements are the main tool, all about the form information / rules take, their content, and the way that information is given to consumers. e.g. Key Investor Information Document (KIID). DISTRIBUTION REGULATION: Marking a general duty of loyalty, where investment firms should "act honestly, fairly and professionally in accordance w/ the best interests of their clients". Regulatory tools include information requirements, but also know your customer rule (cannot recommend a suitable investment w/o knowing the person) and the third party commission ban (when providing independent advice / portfolio management, the investment firm cannot retain fees from any third party). PRODUCT REGULATION: hard paternalism; is about product governance, wherein product development is overseen to ensure the creation of investment products that are in the best interests of their target group consumers. e.g. Markets in Financial Instruments Directive II, product approval processs should: specify target market; ensure relevant risks are assessed; investment firm regularly reviews the financial instruments they offer; they provide distributors with all appropriate info on the financial instrument. Ex post product intervention is also possible, as if a product is found to be harmful it (or its sale / marketing) can be banned. NOTE: this area of regulation generally doesn't include ex ante product authorisation.

How to regulate with administrative discretion?

Discretion = act of individual decisions when administrative authorities apply rules. Applies to all the gov does. Discretion is NEEDED for effective and efficient public administration. Admin decisions can be binding, meaning that authorities need to show how they use their discretion throughout their practices and processes. So, administrative discretion is structured and can be reviewed by administrative courts, which assess suitability, necessity and proportionality strict sense of the administrative action.

General framework of enforcement of EU Consumer Law

European Commission, upon realising the extremely unfair contract terms used by media companies like Facebook, Twitter etc, urges them to change these terms and conditions. While they agreed to amend the terms, it requires effective enforcement. Since 80s, EU realised enforcement cannot be purely up to MS', thus the Union limited the procedural autonomy of the states. In consumer law, MS's must ensure PUBLIC and PRIVATE enforcement. When doing so, MS' must apply EU principles that guide enforcement of EU law (found in directives and CJEU cases): EFFECTIVENESS = national law should not make it practically impossible or excessively difficult for EU nationals to exercise EU rights. Remedies must be adequate, ie fulfil assigned task and not have many obstacles in the way. PROPORTIONALITY = Suitable for pursued objective? Necessary for the objective to be achieved? Proportionate in a strict sense (stricto jure)? DISSUASIVENESS = sanction should discourage infringements and neutralise effects of misbehaviour, which should also apply to private remedies (e.g. banco español de credito case) Proportionality vs dissuasiveness > lack guidance on how they apply to sanctions, which is a problem as they may clash. Thus, particular nuances must be kept in mind.

Three most influential legal systems of administrative law around the world

French approach > admin. law is a body of rules that organises government and public authorities. German approach > admin law is a body of rules protecting citizens against public authority actions. USA approach > admin law manages establishment and operation of public regulatory agencies + encompasses statutes, regulations and judicial decisions governing them. In all three, public regulatory agencies are present.

Global administrative law

GAL studies the interaction between global, national, regional or local public and private actors in pursuit of PUBLIC goals. Different to comparative administrative law, as it focuses on how different actors on different levels interact to solve the SAME ISSUES. Thus, GAL considers rules applicable to administration undertaken in ways that implicate more than pure intra-state structures of authority. Cassesse sees GAL as going beyond itself, in that: it is not purely global, involves all levels; it isn't only administrative, also constitutional and private aspects; not purely law, hard law alongside soft forms of regulation creating standards. EXAMPLE: use of drugs in the Olympic Games. Spawned Sports Law, consisting mainly of the Olympic Charter and World Anti Doping Code (enforced by WAD agency and national agencies). Quasi judicial bodies have also been established as a judicial branch, known as Court of Arbitration for Sport.

Hybrid enforcement of EU financial law

Generally, financial supervisory authorities have the powers to facilitate compensation. e.g. this has been done by the EU by providing a min power to receive remedial commitments for the benefit of consumers from the trader. Some financial supervisory authorities even have the power to ORDER a financial institutions to provide compensation, e.g. UK's FCA. This makes it easier for consumers, as they don't physically have to go to court themselves and suffer those costs and still get compensated (however, this is only for collective / widespread damage)

Who regulates?

Government regulates via legislative, judicial and executive branches. This can happen in a broad scope (not only regulation by public authority, but also imposed by private actors) or a narrow scope (legislation by the public regulator). Public regulator = linked to the government, expected to act in public interest. They receive their powers via statute, or also contractually. Public authorities traditionally belong to the state; private legal actors are granted public authority for a specific purpose. Principles of good administration don't usually apply to private regulators, not as strictly to public bodies. The same thing with fundamental rights, despite some of them working in horizontal relationships.

Legal challenges to enforcement of EU financial law

Growing need to ensure financial stability and consumer protection; effective enforcement of financial law; purely national solutions don't suffice in today's world; only public or private enforcement isn't enough; need to explore how the EU legal principles of effectiveness, proportionality and dissuasiveness factor in.

Types of Paternalism

HARD paternalism = law takes a strong stance that forces individuals to avoid certain risks by depriving them of choice. The rule in place is in their interest. SOFT paternalism = without coercion, the law pushes individuals away from taking certain risks and towards a preferable course of conduct; freedom of choice is preserved, and the state is merely encouraging - not deciding.

Public enforcement in EU financial law

INVOLVED ELEMENTS: building blocks of financial regulation; 3 models of financial supervision; min. powers of national administrative agencies; appropriate administrative sanctions; EU law's European system of financial supervision.

Remedies for non-conformity of goods with consumer transaction regulation

In case of non-conformity, consumer can first ask for either REPAIR or REPLACEMENT. Sellers can refuse this if impossible, disproportionate or w/ unreasonable costs. If there's no room for those two, the consumer can ask for secondary options PRICE REDUCTION or CONTRACT TERMINATION.

Why regulate financial services?

Includes services surrounding payments, credit, investment and insurance. If financial systems aren't stable, economies cannot function properly and individuals will lose their jobs. Particularly with fintech, regulation is needed to manage and protect world economies in the face of new developments like consumer credit and crowdfunding. Financial product lifecycle is essentially the same as any other product. Financial institutions can take different roles: financial product manufactures (financial intermediaries (financial products), distributors (financial service providers)) Information asymmetries are an issue here too, as well as bargaining power imbalance.

Types of investment products and services (conduct of business regulation)

Investment products: shares, bonds, derivatives, crypto assets, packaged retail investment products. Investment services: Execution only = most limited type; you have a broker that can execute your orders with regards to your portfolio and position on the stock exchange. Investment advice = less limited; an investment firm executes your order and provides advice in areas you are uncertain of. Portfolio management = deepest degree of regulatory intervention; the investment firm, in applying more care, fully manages ones portfolio. The investor only determines the amount they want to put in. Examples of mis-selling investment products include Woekerpolis, Dexia, HSBC scandals and the volatile nature of cryptos like Bitcoin.

The big challenge for conduct of business regulation

It is difficult to come up with a way to both empower and protect retail investors. Additionally, there is the REGULATORY DILEMMA - the more we regulate, the less room there is for innovation. Investment products can become harmful when producers fail to inform consumers of risks, conflicts of interest etc. Investment services are often considered to involve even greater risks to consumers than tangible goods, particularly given the risk being financial harm.

Jurisdiction and legal standing in NL with courts

Jurisdiction of dutch courts often depends on the LOCATION OF THE PUBLIC AUTHORITY. There are 12 provinces, 11 arrondissementen. 4 resorts: each of them has a first instance appeal court. Most appeals within civil law. For ADMINISTRATIVE law, the main appeals court is in The Hague in the Hooge Race.

Role of the law in private interest theories of regulation

Law continues to be FACILITATIVE, however the laws likely to be used to UNDERMINE collective welfare in favour of private interests. Business groups are much more organised than citizen groups when it comes to lobbying.

How does market regulation relate to law?

Law has two different possible roles in market regulation. FACILITATIVE = law as an instrument for shaping social behaviour to facilitate market transactions. EXPRESSIVE = law is giving expression to certain values that shape and constrain institutions, mainly the governmental ones.

Role of the law in public interest theories of regulation

Law plays a FACILITATIVE role, as an instrument for shaping social behaviour to allow smooth transactions through markets.

Meta-regulation

Management based regulation that is relying on the internal management and bodies of firms to achieve the public regulators' public goals. (e.g. integrating due diligence into companies' policies, management bodies of investment firms) PROS: regulator outsources work to regulatees for their expertise; creates flexibility in compliance; gives legitimacy to market governance. CONS: internal systems may be designed to achieve firms' private goals rather than public, harming the outcome; over reliance on firms having an ideal culture and right incentives to pursue public goals.

EU law's approach to market regulation

Market integration / regulation is seen as a PROBLEM SOLVING TASK. The EU strives to find the best possible way to combat the issues at hand, using private and public law at the same time depending on where needed. Thus, the distinction between them is not recognised by EU. This EU experimentation with regulatory tools leads to LEGAL HYBRIDS = areas which combine public and private law elements.

Appropriate administrative sanctions (Public enforcement in EU financial law)

Markets in Financial Instruments Directive II Breaches of EU investor protection regulation: LEGAL person > max. of min. 5 million, up to 10% annual turnover. NATURAL person > max. of min. 5 million, up to twice the amount of the benefit derived from the infringement where it can be determined. When deciding on what sanction to impose, competent domestic authorities should consider: the gravity and duration of the infringement; degree of responsibility; financial strength of the responsible (natural / legal) person; importance of profits gained / losses avoided; losses for third parties caused by infringement; level of cooperation by person w/ competent authority; previous infringements. Via these factors, work towards ensuring effective, proportionate and dissuasive sanctions.

Example minimum powers of national administrative agencies (Public enforcement in EU financial law)

Markets in Financial Instruments Directive II, 70(6): powers that EU allows national admin agencies to take and impose when it comes to admin sanctions regarding infringements of this directive. INCLUDES: public statements; order to cease and desist; withdrawal or suspension of authorisation; temporary / permanent ban vs any member of the investment firms management body; temporary ban on any investment firm being a member of / participant in regulated markets; admin fine on a legal person; admin fine on natural person.

Hybrid enforcement (general)

Marks the involvement of (public) regulatory agencies in the process of providing private redress. Two models explain the possible relationships between administrative enforcement and private law remedies. COMPLEMENTARITY MODEL = agencies facilitate private redress INDIRECTLY via administrative sanctions, initiating redress settlement negotiations, or bringing collective action for damages to court. This system brings deterrence and provision of compensation together into one, while still maintaining the institutional separation between agencies and civil courts intact. INTEGRATION MODEL = agencies secure private redress DIRECTLY where compensation schemes are integrated into administrative enforcement. The integrated system immediately serves both deterrence and compensation. However, the institutional separation is completely abandoned since the two areas are completely overlapped.

Contract terms control

Most people do not read terms and conditions, subjecting them to abuse. Thus, contracts must be controlled. like the Unfair Contract Terms Directive -- unfair contract terms are not binding on consumers. Terms are unfair IF they: aren't trasparent due to unclear language (FORMAL FAIRNESS); cause a significant imbalance in rights and obligations to the detriment of the consumer (SUBSTANTIVE FAIRNESS). (e.g. Aziz case)

Role of law in global administrative law

Mostly FACILITATIVE, with law being used as an instrument for shaping social behaviour (despite varying effectiveness). However, the EXPRESSIVE role is somewhat relevant specifically due to: no single, traditional community based on shared value (instead, global); no democratically legitimate supranational institutions; it is more sector-specific and fragmented.

Prudential regulatory tools

NOTE: regulatory tools are essential in financial services given the risks in financial markets are generally higher than risks in consumer goods and services market. Authorisation requirements > needing to get permission to do something, to comply with strict and specific requirements (Markets in Financial Instruments Directive II). Bank capital requirements > regulatory standards for banks to determine how much liquid capital they need to maintain at all times. These requirements are set in EU via the Basel Committee of Banking Supervision, which issued non-binding capital adequacy rules. Requirements on management bodies > guiding the market towards proper culture INSIDE of financial institutions. Individual Level, regards fit and proper test for board members to ensure they care about consumers and other key interests. At Group Level, group dynamics are controlled, as well as the processes and boardroom decision-making to the extent of dissuading risky behaviour.

Principles of good administration

No uniform principles exist; they vary between nations. There are generally agreed upon principles: PROPORTIONALITY EQUAL TREATMENT (of citizens) EFFICIENCY (efficient use of public funds) EFFECTIVENESS (effective in reaching set objective) TRANSPARENCY DILIGENCE (admin authorities must make decisions and substantiate them) ABSENCE OF ABUSE OF POWER 3 DIMENSIONS to consider: Efficiency and quality dimension > is the public interest pursued in a proper / efficient manner? procedural dimension > what procedural guarantees exist for citizens? Public interest dimension > what public interest is involved with the admin action?

Public Authority definition

No universal definition, but they are bodies expected to act in the public interest. Particularly, a body that is public is bound to respect fundamental rights and must follow principles of good administration, while also being subject to judicial review.

Private actors as public bodies

Not all public authorities are part of the state. (e.g. Blanco case) Private organisations qualify as public when there is a STATUTE giving them those powers; or, if there is no statute, they meet 3 cumulative criteria: they perform a PUBLIC TASK / SERVICE, they are PUBLICLY FUNDED for >50%, they act under PUBLIC SUPERVISION.

Who has a legal standing in court against the administrative authority?

OPTION 1: The recipient of the individual decision can go to court. OPTION 2: if one is NOT the recipient, they must hold 5 CUMULATIVE criteria of sufficient interest in the case. (To prevent accio popularis) These are: INDIVIDUAL, PERSONAL, OBJECTIVE, CURRENT, and DIRECTLY INVOLVED interest.

Rights to good administration

One or more principles can underlie rights, which ARE LEGALLY ENFORCEABLE and can be the legal basis for citizens claims. Principles can become rights so long as they are IMPLEMENTED as such IN LEGISLATION. They can be implemented in more concrete norms, e.g. along the spectrum between principles and specific norms. e.g. EU's CFR 41, "every person has the right to have their affairs handled impartially, fairly and within a reasonable time"

Capital markets (conduct of business regulation)

PRIMARY market = investors usually buy securities directly from the issuing company, e.g. initial public offering (IPO). SECONDARY market = investors trade securities after the company sold its offering on the primary market, and investors proceed to trade securities amongst themselves via stock exchanges.

Main structural elements of financial regulation

PRUDENTIAL REGULAITON > concerned with the safety and soundness of specific individual financial institutions + overall systemic risks. Micro and macro prudential regulation complement each other. Tools: requirements on authorisation, capital management bodies. CONDUCT OF BUSINESS REGULATION > distribution phase of how the product is passed on to customers, and to ensure dangerous products don't get on the market. Tools: product regulation, information requirements, duties of care and loyalty.

Relationship between public and private law

PUBLIC LAW: includes crim, admin, constitutional law; deals with relationship between public authorities and citizens; about public interests; distributive (social) justice; public enforcement by public authorities (ex ante compliance (w/o causing damage). PRIVATE LAW: includes contract, tort, property law; relationship between private parties; private / individual interests; interpersonal (corrective) justice; private enforcement by aggrieved private parties (ex post compensation)

The limits of regulatory standards

Problem of INCLUSIVENESS > standards are generalisations, which are but simplifications of complicated realities. Therefore, the way in which a prohibition is presented can lead to various interpretations. Problem of INDETERMINACY > standards are inherently indeterminate, especially those that are open ended, because of the language used, the inability to predict the future, and the regulator's reliance on others for the application of their rules. Problem of INTERPRETATION > need to interpret rules to understand them, and thus a sympathetic audience (ppl who would interpret the standards in line w/ their purpose and regulatory objective) is needed. Standards need an informed audience. Main issue: How to ensure effectiveness of enforcement in securing public goals, given the limits of regulatory standards?

Product liability

Product liability functions ex post. Puts a strict liability on producers for damage caused by defective goods. This aims to provide compensation to grieved consumers (ex post) AND deter against additional violations (ex ante). Producer is liable when product is defective (ie, does not provide safety that a person is entitled to expect). Producer may invoke a defence, e.g. the regulatory compliance defence = producer will not be held liable if the product was required by a public authority in a specific way that ultimately caused damage [ie, narrowed version of the defence]. An example of using public law tools for private law liability! (e.g. Thalidomide tragedy)

Enforcement modes

Public enforcement, private enforcement and hybrid enforcement.

Distinction between public and private law

Public law focuses on the vertical relationship between public and private parties and equips the public authorities with powers needed to regulate. Private law deals with horizontal framework allowing private parties to manage their relations themselves.

Enrolment of gatekeepers

Public regulators involve others, usually private actors, to monitor the market and see to what extent regulatees comply with the regulatory requirements. (e.g. credit rating agencies, online platforms and the EU digital services act) PROS: public regulators can enhance their regulatory capacity by delegating some of that control. CONS: incentive structures of gatekeepers may not always be aligned with regulatory goals given wrong incentives (often profit based).

Multi-level regulation

Regulation is about problem solving, occurs at the level where the issue is present. Levels: LOCAL / REGIONAL (Shht campaign) NATIONAL (nitrogen levels in NL) SUPRANATIONAL (European system of financial supervision) GLOBAL (financial crisis 2008) MULTILEVEL GOVERNANCE -- many countries are affected so they must take regulatory measures in a cooperative way + interplay between soft and hard law. (COVID-19 pandemic, reg at globe, supranational, national and local level. Another example is tacking child labor in the global supply chain)

Why does regulation emerge? (private interest theories)

Regulation is needed to maximise the private interest of specific individuals / groups. If it promotes the public interest as well, its a coincidence. REGULATORY FAILURE = poor performance in discharging core tasks of regulation, with the costs to regulate outweighing the benefits. REGULATORY CAPTURE = when officials within regulatory institutions charged with regulating a specific industry in the public interest, develop such close relations with those they are regulating that they begin promoting those private interests instead.

Key trends found with regard to multi-level regulation

Regulatory power is found to gradually be moving away from the state, becoming less hierarchical. This is because more regulatory standards are being created by transnational networks of intergovernmental institutions, or even non-gov institutions. Particularly, the interplay between hard and soft law is found on all levels. Additionally, a progression towards global administrative law is clear.

Relationship between standards and rights of / to good administration

Rights are fundamental and must be adhered to. Standards, on the other hand, are still important but more an opportunity to raise the bar above fundamental rights. There can still be situations where fundamental rights are respected, but standards of the governance are not met. The Benthem case is a situation where the requirements in the overall of fundamental rights and standards are not reached.

How is administrative law transitioning in today's world?

Scholar/ Lawyer CASESSE: Changing with modern times, administrative law is moving away from being state-centred due to privatisation, decentralisation and globalisation.

How to regulate consumer transactions to ensure sustainable production / consumption?

Striving towards creation of a CIRCULAR ECONOMY, where use and re=use of the earth's resources occurs in a continuous and sustainable way. Consumer and environmental protection are compatible, but can conflict as well: The more consumer remedies available, the greater harms towards healthy or sustainable development. Some problematic regulatory tools include greenwashing and the right to replacement of faulty goods. Better regulation may include promoting servitization (selling service to use a product).

3 Models of financial supervision (Public enforcement in EU financial law)

TWIN PEAK MODEL = prudential supervision and conduct of business supervision is in the hand of two SEPARATE authorities that each handle their own pillar (e.g. NL, UK). INTEGRATED MODEL = one authority in charge of BOTH prudential and conduct of business supervision (e.g. DE). SECTOR BASED MODEL = different authorities in charge of different sectors of financial services combining prudential and conduct of business supervision (e.g. EU's European Supervisory Authorities)

Why do we need market regulation? (scandal examples)

The Dieselgate, Theranos and FTX scandals are all exemplary of a market being distorted by attempts to mislead customers and/or investors, resulting in MARKET FAILURES. Each involved some form of misinformation. Regulation is necessary to seek solutions to preventing such scandals from happening, and ensuring markets continue to prosper.

how are consumer transactions regulated by the EU?

The EU issues many (mainly) directives that guide how different products need to be in different ways and in different stages of their product cycle. These include: Product safety standards; product liability; prohibition of unfair commercial practices; information requirements; right of withdrawal; contract terms control.

What are the administrative authority's options after either reducing / annulling, OR upholding their decision after administrative appeal?

The authority could appeal, but has no reason to as it is again their decision on the line. However, a competitor against the authority may join in additionally on the proceedings.

Competences of Civil and Administrative courts

The decision of which process to go down -- civil or administrative -- depends on specific factors. CIVIL PROCEDURE is the case is based on FACTUAL ACTS of the administrative authority. e.g., the government (like a garbage truck) damaged your car. ADMINISTRATIVE PROCEDURE if the admin. authority has made a decision. Note that not ALL decisions can be litigated against.

Has the public / private divide in regulated areas become superfluous?

The divide has blurred with the rise of Europeanisation, also helping legal hybrids to rise. At the same time, however, the distinction has not fully lost significance and weight, particularly given this being a question more of accent rather than sharp divide. Thus, it depends on how one views it.

What is market regulation?

There are two different perspectives through which MR can be somewhat 'defined': 1: Functional perspective > regulation has three core functions, being standard setting, information gathering or monitoring, and behaviour modification. 2: Scope of what the state can do > the narrow sense = deliberate attempts by state to influence socially valuable behavior; the broad sense = all forms of social control, intentional or not, by the state or other institutions.

Critique of global administrative law

There is fragmentation and lack of coherence in global regulation due to the huge scope and complexity. Given GAL is non-binding in its entirety, its is ineffective, with too few incentives. There is a lack of legitimacy and accountability, given the rules were not created by a traditional legislator. Regardless, it is clear that GAL is here to stay.

Criticism of private interest theories

There is insufficient distinction from these and public interest theories. Enormous weight is attached to legislators' electoral goals by these theories. Just because a legislator says they seek a goal, doesn't indicate that is how the person will behave.

What do both private and public regulatory theories agree on?

They both believe that regulation should mainly serve the public interest, but this is not always the case. Regulatory intervention remains consistently influenced by private interests. Regulatory intervention in the public interest ALWAYS affects private interests.

Judicial Review

This stage occurs when a citizen appeals the competent authority's decision after the administrative appeal. In the judicial case, the judge only looks at the LEGAL ISSUES at hand. First, one goes to the Court of First Instance, and then to the Council of State (ie, appeal). How is the assessment carried out? Judge first assesses if you have legal standing. If so, they consider the decision based on its contents and the judge determines if the public authority acted ultra vires. Then the court considers if the authority acted REASONABLY (assessing suitability, necessity and proportionality stricto sensu of the admin action). Since this is administrative law, the judge ONLY looks at whether the decision is in accordance with law and stuff surrounding that. Once it has determined it was not reasonable the court does NOT actually draw up how the decision should be, instead, the decision is reviewed and annulled for the admin authority to revise if they wish (with consideration for the judgment). IF the court says the decision was not correctly motivated, then the competent authority can draw THE SAME DECISION, with added / altered motivation. The court of appeal MAY decide to give the parties passage directly back to them if the dispute persists.

Why does regulation emerge? (public interest theories)

To pursue the collective goals to improve the general welfare of society. While all theories subscribe to this, it is important to differenciate: ECONOMIC ver. = collective goals in terms of economic efficiency (efficient allocation of resources). It is about preventing market failures, e.g. monopolies and anti-competitive practices; public goods; information deficits and bounded rationality. POLITICAL ver. = not purely about efficient use of resources, also must consider social justice, preventing harm to future generations, and PATERNALISM.

Private enforcement in EU consumer law

Two approaches for consumer victims of violation (who want to take action): INDIVIDUAL action = civil court for claims under 25,000€, an alternative dispute resolution body, or via the European Small Claims Procedure (EU) for claims under 5000€. COLLECTIVE action = Civil court that takes collective cases, e.g. WAMCA in NL. Becoming more common. Additionally, the Representative Actions Directive allows qualified entities to take action on behalf of a group of consumers. Also, the existence of the ex officio obligation of national courts = they must apply EU consumer law and check the conformity with those rules in the case, even if the consumer has not invoked any consumer law rights. Injunctions / injunctive measures = provisional or definitive measures to cease or prohibit a certain practice. Redress measures include: compensation, repair, replacement, price reduction, contract termination, reimbursement of price paid. Redress settlement outside of court is also possible.

Judicial review (continued: what outcomes?)

Types of illegality of administrative authorities' acts / decisions: decision maker acting ultra vires; taking into account irrelevant considerations; irrationality; procedural impropriety. Types of errors by the admin authority: an error of fact, error of law. Different outcomes for decisions by the administrative court: CONFIRM > confirmation of the decision as they found it was legally correct. ANNUL > decision is annulled and no longer in place. Authority can start work on another one. REPLACE > when the court knows there's only 1 possible decision to make for this decision, they will replace the original, taking the role of the executive branch since there's no other option that the admin authority could take. The court tries to avoid this since it goes against separation of powers.

Coordination between public and private enforcement in EU financial law?

Underdeveloped. Civil courts tend not to be bound by any administrative decisions, so courts make their own decision. An exception is present for competition law via Antitrust Damages Directive, 9(1). Despite this, coordination is increasing. Final decision of admin agencies can now be used as evidence in financial law cases. Also, admin authority can transmit all related documents to its admin investigations to a civil court if they request it.

Prohibition of unfair commercial practices

Unfair commercial practices are contrary to the requirements of professional diligence and they are likely to materially distort the economic behaviour of the average consumer. [general clause of unfair commercial practices directive] Privately made rules are part of this public regulatory regime, thus CO-REGULATION. Specific UCP - misleading actions / omissions, aggressive practices. Blacklisted CP - displaying quality mark w/o necessary authorisation. falsely claiming: products can win in games of chance; it can cure illness; was approved; conducting personal visits to consumers' home and ignoring requests to leave; making persistent + unwanted solicitations by phone, fax etc. NOTE: need general clauses, cuz w/o them law may be too narrow and allow new methods and versions of unfair practices to fall through the gaps.

What to consider when viewing cases and considering good administration?

Was it PROPORTIONATE? Was it LAWFUL? Was it FAIR?

Risk-based regulation

When public regulators systematically identify the different risks to their objectives, and focus their resources and regulation on addressing the most critical of those risks. The priorities made are explicit to the public regulation org. and the regulatees. (e.g. EU or member state action in cases of serious risk to health and safety of citizens / consumers) PROS: public regulators systematically focus on most critical risks; risk based framework provides a clear set of priorities. CONS: risks are often contested; public regulators must juggle the demands and challenges of Risks, Resources and Reputation (3 R's), all while also trying to maintain control (hard to manage).

Right of withdrawal

Widely used in online shopping, e.g. consumer has 14 days to withdraw from distance / off premises contract. This encourages online shopping and helps shoppers be more comfortable with buying online. Many exceptions exist, e.g. Consumer rights directive art 16.

Regulatory forms

[note: remember narrow and broad sense regulation] Regulation can take 3 main forms, shifting in order between private ordering (soft law) and state intervention (hard law): SELF-REGULATION = agreements between parties involved in the same market / activities, regulating themselves. Can also be industry wide to dissuade public intervention. PROS: private sector consents and cooperates; expert knowledge involved; admin costs privately paid for. CONS: not always for public interest; lacking democratic legitimacy; no separation of powers; implementation + enforcement in hand of one body / group. CO-REGULATION = gov delegates task of regulating a sector to a self-regulatory industry body, while maintaining residual oversight role. Aka, 'enforce self-regulation'. PROS: has strengths of both self and public regulation while minimising weaknesses. CONS: gov supervision may not be enough to ensure regime serves public interest (body will try to circumvent). PUBLIC REGULATION = hard standards adopted by the gov to control the operation of markets, accompanied by mechanisms of monitoring + enforcement (e.g. Dieselgate) PROS: gov will ensure public interests are served. CONS: gov may lack technical expertise to regulate well; high admin costs being paid by taxpayers. Ultimately, combining / mixing different forms gets the best outcomes.

Relationship between constitutional and administrative law (public law)

constitutional law sets a general framework for the relationship between public authorities and citizens. Administrative law elaborates upon this framework with details and specific rules of how one can actually exercise constitutional rights. e.g.: climate activists blocking A12, right to demonstrate; covid vaccines, right to health, priority of vaccination.

FinTech and sustainable development

fintech = tech enabled innovations in financial services that could result in new business models, applications etc w/ associated material effect on provision of financial services. Sustainable finance = process of considering environmental, social elements and governance (ESG) when making investment decisions to help towards sustainable economic activities and projects. Role Fintech can role in fostering sustainable finance. OPPORTUNITIES: ensuring a sufficient supply of accurate ESG data from firms and translate it into comparable data; increased access to sustainable financial products and services. RISKS: retail investor protection, given the present information asymmetries, lack of sufficient data protection, price discrimination, financial exclusion etc.

Standards of good administration

one or more principles underlie every standard of good administration. Standards are usually NOT LEGALLY ENFORCEABLE, but must still be abided by public authorities. 5 relevant standards: GETTING IT RIGHT > acting in accordance with law, public body's policy; taking proper account of established good practice; providing effective services; making reasonable decisions. BEING CUSTOMER FOCUSED > ensuring easy access to services; informing citizens of expectations; keeping to commitments; dealing with people helpfully, prompts and sensitively; responding to customer's needs flexibly. BEING OPEN AND ACCOUNTABLE > info and advice is clear, accurate and complete; transparency as to criteria for decision making; handling info properly; keeping appropriate records; taking responsibility for its actions. ACTING FAIRLY AND PROPORTIONATELY > treat ppl impartially; no prejudice; no unlawful discrimination; deal with issues objectively and consistently; all decisions and actions are proportionate, appropriate and fair. PUTTING THINGS RIGHT > acknowledging mistakes and apologising; fixing mistakes effectively; clear and timely insight as to how to appeal; operating an effective compliance procedure.