Essay on EU Business Rules: Formation, Operation & Conduct Guidelines

Introduction

The EU is the organization of European countries formed to promote international relations and foster trade. As such, the organization has instituted laws and provisions that facilitate the relationship between member states. It also regulates trade and business within its borders. Various corporate rules apply to the business sector concerning aspects such as the formation, operation, and conduct expected of organizations engaging or planning to engage in business within the EU boundaries. As such, a host of minimum requirements and standards can be applied in determining and addressing legal issues pertaining to establishing a business in any EU member country. In this document, an analysis is conducted of the legal issues and problems that Koharu is experiencing in the German business environment. As such, accurate and consistent reference to EU law will be applied in addressing the legal issues highlighted in the case study. The paper will critically explore relevant statutes and their respective application to facts, and conclude with advice to Koharu.

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Question A

The inability to form any business arrangements in Germany despite the sale success of Flat Pack Furniture is a point of concern for Koharu. The problem that the company is facing is a lack of confidence from distributors. There is the problem of the applicability of law when it comes to establishing a business facility in the country. According to German law, Koharu is required to set up permanent premises accessible to customers for complaints. Nonetheless, the enforcement of this law is debatable under the provisions of the EU. In reference to EU law, the legal issue that she faces entails the compliance requirements of conducting business within EU borders. In this case, the EU has stipulated policies that provide compliance requirements for enabling the company to carry out operations, protecting business stakeholders, ensuring the sustainability of the business sector, and encouraging cooperation between firms within the member states.

Key directives can be applied in discussing how EU laws can facilitate the conduct of business for Koharu in Germany. According to the provisions of Directive 2009/102/EC, there is a guiding framework for the setting up of single companies in the member states European Commission, 2020). In this case, the EU legal form allows companies based in any member state to be established within its borders under one European brand name (European Commission, 2020). A crucial regulation within this framework allows for European Economic Interest, allowing legal, economic activities to be conducted in any EU member state. This is one of the provisions that facilitate cross-border relations, cooperation, and trade. In light of this law, Koharu can cite the viability of her business since it is based in her home, London, UK. This means that it fulfills the requirement set out under this directive, ensuring that it is eligible to be protected by the UE law on the establishment of businesses within the member states. Appropriate application of the law should see Germany allow her to set up her business without legal, economic, or operational restrictions.

Another provision of EU law that is applicable in addressing Koharu's legal issue is matters on the required documentation. Koharu needs to have a certificate of incorporation, as well as passport references and bank letters. Additionally, she will be required to produce a viable business license, contract leases, description of the scope of the business, and the purpose of her company (Barry, 2020). As long as she provides these details, she should be allowed to conduct business within any member state. The German authorities are contravening the law by asking her to establish a permanent facility for customers to visit when they want to make a complaint. EU law that alludes to these requirements is meant to protect the businesses that do not require physical facilities and addresses to operate, examples being online businesses. Thus, under the UE law, this requirement cannot be enforced as it contradicts the policy of the European organization to reduce barriers to conduct business.

It is essential to acknowledge that each EU member state has its unique laws and rules regarding business. Nonetheless, there are joint policies that are shared across the board to ensure uniformity and consistency when it comes to shared business, political, technological, and security objectives. Since Koharu is a citizen of the European organization, she is entitled to set up her business in any EU country (European Commission, 2020). Existing laws also allow her to establish subsidiary branches of the current business. The case provided reveals that Flat Pack Furniture is an existing company with operations in London. Except in the case where the Brexit is finally concluded, the business is allowed to penetrate the German market since it is considered an EU member. The purpose of being a member of the European organization is to facilitate trade and business. This is achieved through the provisions that limit or remove trade barriers and restrictions that may make it difficult for business owners outside of the EU countries to conduct business (European Commission, 2020).

Another guiding principle when it comes to laws applicable to doing business in the EU is the policy of convergence. This policy is necessitated by the need to ensure development across all member states of the organization. As such, the primary goal of this law is to reduce disparity among as well as within EU members. Such an act is applicable in Koharu's case since her business will contribute positively towards the economic development of the parent country (the UK), as well as the host country (Germany). In this case, Germany must put the provisions of this law into consideration and guarantee that the disparities that make it difficult for other EU-based companies to be established are eliminated. The need to have physical premises where customers can visit for complaints is one such disparity. In this case, EU laws on doing business must overrule German laws because Koharu's company is based in a fellow EU member state, and should thus be free of disparities that hinder doing business. As long as she has satisfied the rights and requirements of setting up a business according to EU laws, Germany must let her establish the business. Issues concerning customer complaints can be forwarded through other platforms such as the internet.

Question B

Matters concerning partnerships and competition within EU member states are captured in the European competition law. The law provides for the maintenance of healthy competition within European markets. This regulation is achieved through legislation against anti-competitive practices by organizations. The statute is intended to prevent the establishment of monopolies and cartels, which would damage the interests of Europeans. With this description in mind, it is notable that Koharu is wrong about the applicable law. This is because European law on business facilitates the presence of healthy competition within its boundaries. The scenario presented in the case contravenes this provision by seeking to limit the competitive freedom of the partner. It is not fair for Koharu to define the business opportunities that her partner and retailer are allowed to take advantage of. As stipulated within EU law, article 101 and 109 within agreements signed for the TFEU, the abuse of a firm's market position is prohibited (Finish Competition and Consumer Authority, 2020.). In light of this, Koharu is not allowed to abuse her partnership position, by limiting the type of product that the retailer is authorized to sell.

Moreover, business law states that joint ventures, mergers, and partnerships are based on a set of defined turnover, as illustrated within the merger law. Indeed, it is the responsibility of the European Commission to apply competition law within the allowed primary authority. The partnership that Koharu enters with the Italian retailer regarding the sale of flat packs should not be used to dictate what the retailer can and cannot sell. As suggested, such an agreement may be in breach of specific EU laws. The scope of the competition law is applicable to private enterprises such as Koharu's business. The core of the regulation focuses on the competition between for-profit organizations. Articles 101 as well as 102 employ provisions in delimiting the reach of competition law. Some organizations are not considered subject to competition law, examples being trade unions. However, competition between individually-owned companies is allowed, albeit heavily regulated, to safeguard ethical practices and healthy relationships between the EU-based businesses. In this case, Koharu does not have the right to limit the type of business that the Italian retailer can and cannot engage in on the grounds that they are in a partnership.

Further provisions are provided on acquisitions, mergers, and partnerships. From the case presented, the focus is on partnership. Article 102 of the TFEU offers relevant authorities with the mandate to regulate the behavior of companies (Stones, 2019). These authorities have the power to act on companies that abuse their market position or power. The law is applied to prevent companies from gaining a dominant market position that will allow them to abuse such market power. A true partnership, as stipulated by law, involves two separate entities that form a new alliance where one or both the companies assume the responsibility of undertaking market activities. A more detailed definition of partnerships under European law states that it is a formal agreement where they share duties in managing and operating the business, as well as sharing the profits (Shopify, n.d.).. The EU allows several types of partnerships, including where the partners have limited and unlimited liabilities. Businesses are also entitled to enter into arrangements where one is a silent partner, meaning they do not participate in running the business. The case provided reveals that the partnership between Koharu's company and the Italian retailer requires the input of both parties in managing and operating the business. Therefore, general partnership laws in the EU apply to their agreement.

A partnership control policy can be applied in Koharu's case. The purpose of the control, according to EU laws, is to avoid the creation of market structures that can strengthen a dominant position, which may foster abuse of this situation. It has been explained that Koharu's plan involves breaking into more markets in the EU, which prompted the business to enter into a direct partnership. This is a situation that denotes her growing market position in the EU. This is why the partnership control is applicable in this case to prevent abuse of her market position. Clearly, limiting the ability of the Italian partner to engage in other businesses is abusing her market position. Koharu may be in breach of specific EU laws on competition and partnership regulation by citing competition as a reason to prevent her partner from engaging in business outside the organization. The option that Koharu can take is to apply for intellectual property rights to prevent her partner from taking advantage of the partnership to engage in unhealthy business competition. The specific laws avoid a breach of intellectual property, which is a policy that will effectively shield her business from unfair competition. It is a better option than limiting the ability of the retailer to engage in business for two years. For regulation 139/2004 to apply, the partnershi...