The literature on legislative decision-making and bargaining in the EU has reached a common conclusion that the European Parliament (Parliament) and the Council of the European Union (Council) are on an equal footing in the main legislative procedure, the co-decision procedure. We present theoretical and empirical evidence to suggest that this is not the case. First, our analysis of the formal rules reveals that the Council has conditional agenda-setting power due to a change in the majority thresholds for adopting legislation from the first to the second reading in the Parliament. This change has important implications for the internal dynamics of the Parliament and its institutional powers vis-à-vis the Council. Testing these analytical considerations of the formal decision rules against voting data on all co-decision legislation adopted in the two institutions between 1999 and 2004, our empirical findings show that: first, from 1999 to 2004 coalition formation in the Council fell predominantly along the traditional left–right political dimensions when negotiating co-decision proposals. Second, when disagreement over legislation is recorded in the Council, a strong divide can also be found in the Parliament. Third, when the Parliament is divided along party political lines, it is less likely to be able to meet the absolute majority requirement for amending the proposal adopted by the Council. Lastly, Parliament amendments are most likely to be adopted when a decision by voting is requested by a party group associated with the main ideological contingency in the Council
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