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The Economics of Harmonizing European Law

Edited by Alain Marciano and Jean-Michel Josselin

One of the major effects of the continual process of European integration is the growing importance of transnational institutions and the accompanying legal harmonization. Such institutional changes have led to a seemingly irreversible transformation in public decision making, whereby power at the national level is displaced to the European and regional levels. This essential book provides a law and economics analysis of the challenges arising from these shifts in authority.
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Chapter 7: Product liability and product safety in a federal system: economic reflections on the proper role of Europe

Michael G. Faure


Michael G. Faure 7.1 INTRODUCTION In Europe it has been known for a long time that the domains of product safety and product liability are, for many years now, no longer subjected to only national legislation. Europe has issued many Directives harmonizing product safety standards. In addition there is the Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products. The question that will be addressed in this chapter is whether there are economic reasons for a harmonization of product safety standards and product liability. The fact that product safety standards have, to a large extent, been harmonized, can at first blush easily be understood as an important instrument to facilitate interstate trade. However, it is less clear why a harmonization of product liability law was also needed. This harmonization of product liability is all the more remarkable since Europe has so far taken in fact only one initiative with respect to tort law, which is precisely the domain of product liability. Other attempts, for example, to harmonize the liability for services, have failed (see Faure and Hartlief, 1996, pp. 241–2). The European product liability Directive entered into force when there was not yet any talk about a subsidiarity principle. According to this principle, which was introduced by the Single European Act for environmental matters and enlarged to a general principle of community policy by the Maastricht Treaty, the ‘community shall take action...

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