Europeanization Through Law, Compliance, and Party Differences – The ECJ’s ‘Rüffert’ Judgment (C-346/06) and Amendments to Public Procurement Laws in German Federal States

ABSTRACT In comparing the amendments to public procurement laws after the ECJ's 'Rüffert' judgment (European Court of Justice 2008, C-346/06) the paper explores the compliance to Europeanization through law in the 16 German federal states. Instead of unilinear convergence, three types of reactions were identified. First, conservative-liberal governments rescinded the respective regulation. Thus, they dismantled their policy. Second, conservative governments that were susceptible to the pressures from small- and medium-sized business associations absorbed the effects of the ECJ ruling by enacting quick and minor amendments. Third, social democrat led governments tended to seek out policy alternatives that were consistent with European law. These governments engaged in EU-induced policy expansion, eventually setting up new procurement laws that included a number of social and environmental standards. Therefore, the case study at hand confirms studies of Europeanization that highlight the re-assertion of party differences which depends on both fundamental programmatic differences as well as plurality of European law. Key Words: Europeanizationfederal statespolitical party differencespublic procurement lawposted workers directive Acknowledgement I am grateful to the Hans Böckler Foundation which provided funding for this research project. I thank also Nicole de Cuir, Andreas Hänlein, Rolf Jordan and the two anonymous reviewers of the journal for their helpful comments. Notes 1. Lower Saxony's (Niedersachsen) procurement law stated that companies, who bid for works contracts, are required at the time of tendering to declare in writing that they will remunerate the employees engaged in the work with at least the wage rate agreed to in the applicable collective agreement. The 'Rüffert' judgment dealt with a case in which the contractor engaged to build a correctional facility had agreed to comply with these obligations. However, the then hired Polish subcontractor paid its employees on the job-site merely 47 per cent of the wage rate required in the collective agreement. A penalty for breach of contract in the amount of 85 000€ was leveled against the contractor for violation of the contract compliance obligations after termination of the works contract. The Higher Regional Court of Celle (OLG) submitted the case to the ECJ in a request for a reference for a preliminary ruling. 2. An attempt in 2002 to implement contract compliance regulation at the national level failed due to objections from the German Federal Council (Bundesrat). 3. According to data from the Institute for Employment Research's (IAB) Establishment Panel the amount of West German companies covered by collectively negotiated wage rates sank from 53 per cent to 39 per cent between 1998 and 2007 compared with a decrease of 33 per cent to 24 per cent in East German firms (Bispinck and Schulten Citation2009, 203). 4. As of June 2006 the following generally binding minimum wages applied in the construction industry: 8.90€ in the East German states compared to 10.30€ in the West German states. 5. It has to be taken into account that the SPD also retained a calculated option for forming a coalition with the CDU. 6. The Hamburg 'case' was subject to a specific sort of dynamic. Contract compliance regulation was pushed through by the opposition fraction during a time, in January/February 2004, when the former CDU–FDP–Schill party coalition was in the process of dissolving. The final proposal for the introduction of procurement legislation was drafted and implemented by the opposition parties of the SPD and GAL (The Green Alternative List) together with a few representatives from the Law and Order Offensive Party. 7. It should be clarified that this paragraph focuses on the German debate in which the judgement is perceived as a cause for actions taken. It does not depict the general discussion of the ECJ's restrictive interpretation of the Posted Workers Directive in the line of the Viking, Laval, and Rüffert decisions (Deakin Citation2008; Joerges and Rödl Citation2009; Kilpatrick Citation2009). 8. For instance, contract compliance and minimum wages were subordinated to fair trade, ILO Core Labour Standards, equality of treatment of the genders and educational quotas. 9. This was codified in the Act against Restraints on Competition (GWB), as amended in 2009, and which serves as the relevant material basis for procurement law with reference to the above mentioned European directives: 'Additional demands can be made of the contractor regarding the performance of a contract, in particular these requirements can pertain to social, environmental and innovation-related aspects' (Gesetz gegen Wettbewerbsbeschränkungen 2010. 97 no. 4). 10. For example, this refers here to the International Labour Organization's (ILO) Conventions on Forced Labour, Child Labour, Non-discrimination and the Principle of the freedom of association.

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