European Commission

European Commission
Headquarters	Brussels, Belgium
Key People	Ursula von der Leyen, President
Web site	https://ec.europa.eu/info/index_en

The European Commission (EC) is the politically independent executive branch of the 27-member European Union (EU) and is mainly responsible for proposing legislation to its parliament, implementing its decisions and administering its budget. The EC also produces research such as economic forecasts aimed at assisting the EU in its decision making processes. It proposes legislation, enforces EU law, manages the EU budget, and represents the Union in certain international negotiations on behalf of the member states. Within the European Union’s institutional framework, the commission plays a central role in the legislative process by holding the near‑exclusive right of legislative initiative for most policy areas and by overseeing the application of EU treaties and secondary legislation in the member states.

The EC consists of 27 individuals (commissioners), one from each of the EU's member states, who are appointed every five years. They are charged with acting not in the interest of their own state but in the interest of the EU as a whole. The term of the current EC and its president, Jean-Claude Juncker of Luxembourg, expires in October, 2019. The EC is located in Brussels, Belgium. The EC is divided into 24 separate 'super-ministries' known as Directorates-General, each supervised by an EU bureaucrat who reports directly to the EC. They administer policy areas ranging from agriculture and rural development to education and culture to transport and energy. It also contains 12 separate offices that deal with a range of bureaucratic responsibilities such as humanitarian aid and European anti-fraud.

History

The origins of the European Commission lie in the executive structures created for the early European communities in the 1950s, particularly the High Authority of the European Coal and Steel Community established under the Treaty of Paris in 1951 to oversee the common coal and steel market among six founding states. Parallel “commissions” were later created for the European Economic Community and the European Atomic Energy Community following the Treaties of Rome, signed on March 25, 1957, and entering into force on January 1, 1958, which set up separate executives to propose and implement policy for those communities. These early executives shared a common logic of supranational oversight, under which they made proposals to the council of ministers and ensured that the nascent common market rules were implemented by national authorities.

Institutionally, the modern European Commission was created by the Merger Treaty, also known as the Treaty of Brussels, which was signed on April 8, 1965 and entered into force on July 1, 1967, unifying the separate executives of the European Coal and Steel Community, the European Economic Community, and the European Atomic Energy Community into a single commission and a single council for the European Communities. The Merger Treaty rationalized the institutional structure by introducing a single administrative budget and a single administration for the communities, while leaving the underlying treaties of each community in force, thereby paving the way for a more coherent executive at the European level. This unified commission later became the core executive institution of the European Union when the Treaty on European Union (Maastricht Treaty), which entered into force in 1993, created the EU and integrated the existing European Communities into its structure.

In 2008, EC created a stir by releasing an economic report indicating that economic growth within the euro zone (states that have adopted the EU's common currency) would slow considerably and even stall completely until at least mid-2009 and in some cases longer. The report prompted a debate within member states about whether co-ordinated, EU-wide action or national responses were the appropriate response to the forthcoming economic difficulties. The EC report also estimated that euro-zone GDP declined 0.2 percent in the second quarter of 2008, 0.1 percent in the third quarter and predicted a further contraction of 0.1 percent in the fourth, thereby meeting the technical definition of a recession.

In early 2009, the EC scrutinized so-called high-frequency securities trading, following a similar investigation in the U.S.

In December 2019, the European Commission's executive vice-president Valdis Dombrovskis said that Brussels was ready to cut off the City of London’s post-Brexit market access, though it was prepared to give Britain market access via a system of “equivalence” decisions, similar to rules used by banks and brokers in countries like the U.S. and Singapore to gain access to European markets.

Over time, successive treaty reforms, including the Single European Act, the Maastricht Treaty, the Amsterdam Treaty, the Nice Treaty, and the Treaty of Lisbon, modified the commission’s powers and internal organization, often in response to enlargement and to debates over the balance between supranational and intergovernmental decision-making. For example, the Treaty of Lisbon, which entered into force in 2009, clarified the commission’s role in external representation for areas of Union competence and adjusted the appointment process for the president and the college of commissioners, strengthening links with the European Parliament. The European Council decided in 2013, through a unanimous decision, that each member state would continue to have one commissioner, ensuring that the college would remain composed of one member from each of the 27 EU countries despite earlier treaty provisions envisioning a reduced college size.

The commission’s historical development has been closely linked to debates about the “democratic deficit” in the EU, particularly regarding the legitimacy of a powerful, non‑elected executive that holds the right of legislative initiative and can bring infringement actions against member states for violating EU law. Academic and policy commentary has traced how the introduction of direct elections to the European Parliament, the strengthening of parliamentary co‑decision powers, and the requirement that the Parliament elect the commission president have been intended to enhance democratic accountability while preserving the commission’s technocratic role.

Role in financial markets and regulation

In the area of financial markets, the commission is a primary architect of legislation that shapes the functioning of EU futures, options, and other capital market instruments, working to harmonize rules across member states. Following the global financial crisis, the commission proposed and helped establish the European system of financial supervision (ESFS), which combines national authorities with three European supervisory authorities—the European Banking Authority, the European Securities and Markets Authority, and the European Insurance and Occupational Pensions Authority—and the European Systemic Risk Board, creating a multi‑layered framework for oversight of banks, securities markets, insurers, and systemic risks. The commission adopts legislative proposals to create or amend sectoral frameworks, such as those governing securities markets, which are then complemented by technical standards developed by the supervisory authorities and applied by national regulators, including in areas such as electronic trading, trade reporting, and transparency.

The commission’s directorate-general for financial stability, financial services and capital markets union (DG FISMA) plays a key role in designing rules for swaps, central clearing, and central counterparties as part of the post‑crisis regulatory agenda to reduce counterparty risk and improve risk management practices in derivatives markets. Legislative initiatives championed by the commission have included frameworks for market infrastructure and investor protection, such as rules seeking to enhance pre‑ and post‑trade transparency, strengthen hedging standards, and ensure robust settlement arrangements in securities and derivatives markets. The commission also scrutinizes market structures and trading venues, including those operated by major exchanges such as CME Group (CME), in order to assess the competitive effects of mergers, joint ventures, or other arrangements that may affect liquidity and cross‑border access to European financial markets.

Regulatory Agreement with the CFTC

The European Commission and the U.S. Commodity Futures Trading Commission in February 2016 announced a "common approach" to clearinghouse requirements that would pave the way for European regulators to grant equivalence to U.S. clearinghouses. The agreement would allow European CCPs to do business in the U.S. more easily and U.S. CCPs to continue to provide services to EU companies. The deal will also result in millions of dollars of savings daily in the amount of collateral derivatives dealers are required to post.

The agreement averted the risk of enormous disruption to financial institutions like banks and institutional investors when the first EU rules for clearing houses came into effect in early 2016.

The agreement was the culmination of three years of sometimes bitter talks over common standards for the global derivatives markets mandated by world leaders after the 2008 financial crisis.

In a joint statement on September 13, 2019 following a meeting on cross-border derivatives regulatory issues, the CFTC and European Commission reaffirmed their mutual commitment to transatlantic cooperation among regulators.

Controversies

Despite its formal independence and treaty‑based mandate, the European Commission has been at the center of controversies concerning democratic accountability and the perceived “democratic deficit” of the European Union, with critics arguing that an unelected executive holds significant agenda‑setting power and that the process for appointing commissioners is insufficiently transparent or responsive to voters. In the context of rule‑of‑law conditionality, the commission’s use of mechanisms that allow EU funds to be suspended or reduced for member states accused of undermining judicial independence or other fundamental values has sparked political disputes, particularly with Hungary and Poland, whose representatives have described such conditionality as a form of “political weaponisation” and even as a “death sentence for the EU.” The European Court of Justice has upheld the legality of the conditionality regulation that allows the commission, subject to Council approval, to propose cutting funds for rule‑of‑law breaches, prompting further criticism from some national governments that view the commission’s actions as overreach.

Key People

• Ursula von der Leyen, President