[MUSIC] Once it has been established that the European Union is competent to act in a given policy field, can the E.U. act freely? That means, without incurring in any other limits? The answer is no. What it can actually do, is in turn subject to constraints. And the main constraint is represented by the principle of proportionality. This principle ensures that European action remains within the limits of powers conferred to it by the member states. And this even when it takes place within an area in which it is competent to act. In essence, this principle suggests that one should not crack a nut with a sledgehammer. The means used to achieve a specific objective such as to protect your health, your environment, or your data on Facebook, must be tailored to that particular objective. In particular, if the EU can reach the same goal with a less intrusive mean, it should go for that option. Let's illustrate proportionality with an example taken from real life. As you know, the EU, together with many other countries around the world, seeks to limit the consumption of energy, in particular, electricity, by citizens. It does so because of the high cost of energy, the environmental effects linked to its production, as well as the geopolitical complexities of energy supply. The policy goal of reducing individual consumption of energy, and in particular electricity, can be achieved in different ways. Let's pause here for a second. And ask yourself, how would you suggest to the EU or your own government to achieve this objective? In other words, how to induce individuals to use less energy in their daily lives. Well, each of the ideas you came up with, regardless of their merits, is called policy option. It is indeed one of the possible ways we may go to attain our policy objective. Thus one policy option may be to limit the access to electricity in certain particular hours of the day. What may induce people to look for alternative sources of energy. Another may be to increase the price of the energy unit. in order to discourage consumption. Another one may be to mandate energy levels on the electronic appliances consumers buy such as washing machines and cleaning vacuums. Another one may be to educate citizens to have a more responsible use of energy by switching off the lamps, their computers and all their electronic equipments when they are not in use. Let's take a quiz together. From a proportionality perspective, which of the following is the most appropriate policy option to decrease individual consumption of electricity? Option one, limiting access in certain hours. Option two, increasing electricity price at the unit. Option three, mandating labeling schemes on electronic appliances. Option four, educating for a more responsible consumption. My educated guess, is that in the current circumstances, the most likely answer you may get from a policy maker in your government or at the European level, is labeling. This appears true for several reasons and it derives from a proportionality analysis. Under proportionality, you should ask yourself the following: Is the proposed policy option suitable to achieve the declared goal? And if so, is the same policy option necessary to achieve that goal? First, let's ask yourself whether if implemented, the proposed policy options we're thinking about are going to make a difference. You should enquire about the potential aptitude of each of those ideas to reduce individual energy consumption. Here it seems clear that on paper, all of the options above appear capable, although to a different extent, to obtain their objective to reduce electricity. Second, under necessity, you should also ask yourself whether these measures are going to be necessary to actually achieve that goal. Well, to make such an assessment, you should know how effective each of those policy options is in obtaining the energy reduction you're looking for. In other words. Which among the different options is the most promising in terms of energy reduction? It appears intuitive that education, per se, won't be as successful as a policy limiting access to electricity in certain hours. The second option is mandated to individuals. Individuals do not have a choice. They won't have access to electricity while the first education leave individuals free to enjoy energy access. This inevitably affects the success of the policy, and therefore, its necessity under the proportionality analysis. However, necessity does not suggest that the EU chooses automatically the most effective option to attain its objective. Rather proportionality hints us to choose the policy option that being among the most effective is the one that brings us less cost. This does not only mean the least costly. But also the least intrusive to individual autonomy and the least trade restrictive. If in examining the light of this analysis, it appears clear that limiting access, increasing energy unit price, and mandating labeling schemes on electronic appliances are more promising than educating more responsible consumption. And also that among the three, the least restrictive and costly is labeling. It is therefore likely to be preferred over access restriction which limits individual autonomy and price increases which might be discriminating among people on the basis of money. What we define as regressive policy. Let me provide you an example with the proportionality of a European policy as being at stake. In 2004, the European Union adopted the airline passenger rights regulation. This is an important law for all of us, regardless of where we live. Because this regulation provides protection to all passengers regardless of their actual citizenship in the event of denial of boarding, what we call overbooking, and of cancellation of, or long delays to flights in Europe, from Europe and within Europe. Under that regulation in the event of cancellation of a flight, the air carrier be it Air France or Lufthansa or United Airlines, is to offer passengers a choice between the reimbursement of the cost of the ticket, and the re-routing to their final destination. In the case of delay, the passengers are also entitled to free care. Meals, refreshments, telephone calls, and in some circumstances, hotel accommodation. IATA, the Trade Association of Airline Carriers, and ELFA, the European Low Fares Association, including Ryanair, contested the European Passengers Right regulation by claiming, among many other things, that the measure this regulation prescribed were manifestly inappropriate for attaining the objective of strengthening their protection for passenger who suffer cancelation or long delays. This time what was at stake was not the competence of the EU to act. Everybody knew the EU had the competence to step in. Rather, it is the proportionality of the adopted policy which was contested. In particular the low cost association notably Ryan Air, EasyJet wondered tongue in cheek whether it was proportionate to impose on them the payment of 250 euros for a cancellation of a flight, whose average price is 50 euros, sometimes much less than that. The court judged that the amount of the compensation did not appear excessive and that in any event, the lower fares airlines did not qualify as a different market justifying the application of different rules. To sum up, remember that every single time the European Union develops a new policy, be it a regulation of car safety or bank payments, what it proposes must be proportionate. That is, it should not crack a nut with a sledgehammer.