Deterring the State Versus the Firm: Soft and Hard Deterrence Regimes in EU Law

This paper sheds light on the existence of a differential deterrence regime in EU law, depending on whether the State or the firm is the addressee of a legal obligation. To that end, we review two areas of EU law – environmental law and competition law. Both disciplines employ fines to deter the State and the firm respectively from violating their specific duties under the Treaty: the ‘duty to transpose’ with regard to State obligation under environmental law, and the ‘duty to compete’ in relation to firms under competition law. We show how the deterrence regime is softer on the State in at least three ways: functionally (purpose ascribed to the penalties), operationally (method followed to set and liquidate the penalty), and procedurally (requiring prior judicial approval as opposed to having immediate applicability). These findings are significant for two reasons: they suggest a State versus firm discrepancy in the EU’s deterrence regime, and serve to initiate a debate on the desirability of such a divide.