Who May Become the President of Italy: An Ugly Letter from Germany

On 4 October, three German MEPs, Katarina Barley, Daniel Freund, and Moritz Körner, wrote an open letter to EPP President Manfred Weber calling on him to intervene in the formation of the Italian government

Proportionality and Karlsruhe’s Ultra Vires Verdict: Ways Out of Constitutional Pluralism?

In May 2020, for the first time in its history, the Federal Constitutional Court (FCC) of Germany declared Union acts as being ultra vires. According to the FCC, the European Central Bank (ECB) and the Court of Justice of the European Union (CJEU) had acted beyond their mandates because they did not apply strong proportionality standards to the ECB’s Public Sector Purchase Programme (PSPP). The resulting stalemate within constitutional pluralism has revived the discussion about the possible introduction of an Appeal Court with the “final say” over constitutional conflict. As the analysis of the PSPP conflict shows, such a judicial authority would reach its limits the more we move from the surface to the core of the struggles between European and national constitutional law. The different readings of proportionality are difficult to bridge, and the mutually exclusive claims about the nature of the supremacy of European law are not accessible to compromise at all. We should therefore not expect too much from an Appeal Court, if it were introduced.Im Mai 2020 hat das deutsche Bundesverfassungsgericht (BVerfG) erstmals europäische Rechtsakte als ultra vires klassifiziert. Dem Urteil zufolge haben die Europäische Zentralbank (EZB) und der Europäische Gerichtshof (EuGH) ihr Mandat überspannt, indem sie auf eine strenge Verhältnismäßigkeitsprüfung des Public Sector Purchase Programme (PSPP) der EZB verzichteten. Das Patt zwischen den Gerichten hat die Debatte über ein europäisches Berufungsgericht, das in europäischen Verfassungsgerichten das letzte Wort sprechen könnte, neu belebt. Wie die Analyse des PSPP-Konflikts verdeutlicht, würde ein neues Höchstgericht an Grenzen stoßen, sobald die Tiefenstruktur des Spannungsfelds zwischen Europarecht und mitgliedstaatlichem Verfassungsrecht in den Blick gerät. Die unterschiedlichen Lesarten des Verhältnismäßigkeitsprinzips lassen sich nur schwer überbrücken und der Konflikt über die Natur des Vorrangs des Europarechts ist Kompromissen gänzlich unzugänglich. Von einem Berufungsgericht, würde es gegründet, sollte daher nicht zu viel erwartet werden.Contents 1 When European and constitutional law collide 2 A European Appeal Court? 3 From Karlsruhe to Luxembourg and back: OMT and PSPP 4 What is proportionality? 5 Proportionality in the PSPP decision of the FCC 6 Discussion 7 Conclusion: A way out of constitutional pluralism? Reference

Proportionality in the PSPP Saga: Why Constitutional Pluralism Is Here to Stay and Why the Federal Constitutional Court Did not Violate the Rules of Loyal Conduct

In May 2020, for the first time in its history, the Federal Constitutional Court (FCC) of Germany declared Union acts as being ultra vires. According to the FCC, the European Central Bank (ECB) and the Court of Justice of the European Union (CJEU) had acted beyond their mandates because they did not apply strong proportionality standards to the ECB’s Public Sector Purchase Programme (PSPP). The resulting stalemate within constitutional pluralism has revived the discussions about loyalism within constitutional pluralism and about the possible introduction of an appeal court with the “final say” over constitutional conflict. This Article shows that, contrary to the assessment of some critics, the controversial ruling of the Federal Constitutional Court was within the bounds of loyal behavior within constitutional pluralism. As the analysis of the PSPP conflict also shows, a European super-judicial authority would reach its limits the more we move from the surface to the core of the struggles between European and national constitutional law. The different readings of proportionality are difficult to bridge, and the mutually exclusive claims about the nature of the supremacy of European law are not accessible to compromise at all. We should therefore not expect too much from an appeal court, if it were introduced.I. Introduction: when European and constitutional law collide. II. Constitutional pluralism and the idea of an appeal court. III. From Karlsruhe to Luxembourg and back: OMT and PSPP. IV. The many faces of proportionality. V. Proportionality in the PSPP decision of the FCC. VI. Discussion. VII. Conclusion: a way out of constitutional pluralism

[Book Review] Democracy and Prosperity: Iversen, Torben; Soskice, David: Democracy and Prosperity: Reinventing Capitalism through a Turbulent Century (New Jersey: Princeton University Press, 2019)

Democracy and Prosperity is an exceptionally provocative and thereby stimulating book, especially for progressive readers. Torben Iversen and David Soskice argue that capitalism and democracy are mutually reinforcing. Democratic capitalism has worked well and will most likely work well in the future. Globalisation is not putting into question the primacy of politics over economic matters, nor will populism challenge the symbiosis of democratic politics and free markets

The Diversity of Wage Regimes: Why the Eurozone Is Too Heterogeneous for the Euro

Why did the transnational synchronization of wage inflations fail during the first 10 years of the euro? We analyze data from 1999 to 2008 for 12 euro members and estimate increases of nominal unit labor costs both in the overall economy and in manufacturing as dependent variables. While our analysis confirms that differences in economic growth shaped the inflation of labor costs, we add a political-institutional argument to the debate and argue that the designs of the wage regimes had an additional, independent impact. In coordinated labor regimes, increases in nominal unit labor costs tended to fall below the European Central Bank’s inflation target, while in uncoordinated labor regimes, the respective increases tended to exceed the European inflation target. Due to the stickiness of wagebargaining institutions, the lack of the capacity to synchronize inflation is not likely to disappear in the foreseeable future

An Emerging Market for Corporate Control? The Mannesmann Takeover and German Corporate Governance

Corporate governance in Germany is often described as a bank-oriented, block-holder or stakeholder model where markets for corporate control have not played a significant role. This case study of the hostile takeover of Mannesmann AG by Vodafone in 2000 demonstrates how systemic changes during the 1990s have eroded past institutional barriers to takeovers. These changes include the strategic reorientation of German banks from the "house bank" to investment banking, the growing consensus and productivity orientation of employee co-determination and corporate law reform. A significant segment of German corporations are now subjected to a market for corporate control. The implications for the German model are examined in light of both claims by agency theory for the efficiency of takeover markets, as well as the institutional complementarities within Germany's specific "variety" of capitalism. While the efficiency effects are questionable, the growing pressures for German corporations to achieve the higher stock market valuations of their Anglo-American competitors threaten the distributional compromises underlying the German model.In der Vergangenheit wurde die Abwesenheit feindlicher Übernahmen als typisch für das deutsche Modell der Unternehmenskontrolle angesehen. Anhand einer Fallstudie zur feindlichen Übernahme der Mannesmann AG durch Vodafone in 2000 wird in diesem Papier argumentiert, dass institutionelle Barrieren gegen feindliche Übernahmen im Laufe der 1990er Jahre so weit erodiert sind, dass in Deutschland ein Markt für Unternehmenskontrolle entsteht. Dazu zählen insbesondere die Umorientierung der Großbanken vom Hausbank- zum Investmentbankparadigma, die fortschreitende Konsens- und Produktivitätsorientierung der Mitbestimmung und Veränderungen des deutschen Aktienrechts. Die Gruppe der Großunternehmen mit gestreuter Aktionärsstruktur sieht sich dem Zugriff des Markts für Unternehmenskontrolle nunmehr ausgesetzt. Die These der Principal-Agent-Theorie, der zufolge feindlichen Übernahmemärkten Effizienzwirkungen zuzuschreiben sind, wird kritisch bewertet. Die Gefahr feindlicher Übernahmen wird zu weiteren Anstrengungen zur Steigerung der Aktienkurse führen. Damit könnten die Verteilungskompromisse, die dem deutschen Modell zu Grunde liegen, unter Druck geraten.1 Introduction: German Corporate Governance in Comparative Context 2 The Market for Corporate Control 2.1 The U.S. Experience: Efficiency or Opportunism? 2.2 The Absence of Hostile Takeovers 3 The Role of Takeovers in Germany 3.1 Institutional Factors Suppressing a Market for Corporate Control 3.2 Hostile "Stake-Building" as a Mechanism of Control? 4 The Case of Mannesmann 4.1 Ownership, the Stock Market, and "Shareholder Value" 4.2 The Takeover Bid 4.3 The Defensive Strategy Pursued by Mannesmann 4.4 Banks and Investment Bankers 4.5 The Role of Labor: Works Council, Employee Share Ownership, and Unions 4.6 "Germany - Where Capitalism Operates a Little Differently": Corporate Culture in Politics, Press, and Public 4.7 The Conclusion of the Takeover Battle 4.8 Post-merger Reorganization 5 Conclusion: Hostile Takeovers and the Institutional Change in German Corporate Governance 5.1 Mannesmann in Context 5.2 Political Regulation of Takeovers 5.3 Institutional Change and the German "Model" of Corporate Governance Reference

Integration Among Unequals: How the Heterogeneity of European Varieties of Capitalism Shapes the Social and Democratic Potential of the EU

At first glance, the social purpose and the democratic potential of the EU have made progress in the last 15 years. However, this impression is misleading. We argue instead that the social and democratic potentials of the EU are crucially shaped by the heterogeneity of European varieties of capitalism. First, we locate our argument in the integration literature and argue that political-economic heterogeneity shapes not only intergovernmental bargains but also the opportunities for judicial integration. Second, we document the heterogeneity among European varieties of capitalism and how it has increased with each round of enlargement. Third, we show how the heterogeneity of political-economic interests has led governments to opt for autonomy-protecting solutions whenever European initiatives have targeted highly sensitive institutions that constitute their different political-economic regimes. Fourth, we also show that, despite this, the European Court of Justice (ECJ) has often overruled such autonomy-protecting measures by extending the reach and scope of the European fundamental freedoms. We conclude, fifth, that the asymmetry between market-enforcing and market-restricting integration is not likely to disappear in the near future, and that the heterogeneity of European varieties of capitalism limits not only the social but also the democratic potential of the EU.Auf den ersten Blick scheinen sich die sozialen und die demokratischen Potenziale der EU in den vergangenen fünfzehn Jahren vergrößert zu haben. Doch dieser Schein trügt. Denn diese Potenziale werden in erheblichem Maße von der Heterogenität der europäischen Spielarten des Kapitalismus geprägt. Diese Argumentation verorten wir zunächst in der Integrationsliteratur und verdeutlichen, warum die politökonomische Heterogenität der EU-Mitgliedsländer nicht nur die Ergebnisse intergouvernementaler Verhandlungen, sondern auch die Möglichkeiten der judiziellen Integration beeinflusst. In einem zweiten Schritt dokumentieren wir die politökonomische Heterogenität der EU und ihre Zunahme im Zeitverlauf anhand von Daten. Drittens zeigen wir, dass die Mitgliedstaaten häufig autonomieschonende Lösungen wählten, wenn europäische Initiativen auf die Transformation politökonomisch sensibler Institutionen zielten. Viertens führen wir vor, wie der Europäische Gerichtshof (EuGH) genau diese autonomieschonenden Lösungen immer wieder konterkarierte, indem er die europäischen Grundfreiheiten immer extensiver interpretierte. Im Ausblick verdeutlichen wir, dass die Asymmetrie zwischen marktschaffender und marktkorrigierender Integration auch in Zukunft nicht verschwinden wird, und legen dar, warum die politökonomische Heterogenität nicht nur das soziale, sondern auch das demokratische Potenzial der EU prägt.1 Introduction: A political-economy perspective on European integration 2 Member state heterogeneity in the light of integration theory 3 The diversity of European production and welfare regimes 4 Political and judicial integration under conditions of heterogeneity Political integration and national autonomy Expanding markets: Integration through law 5 Conclusion: How heterogeneity shapes the democratic deficit Reference