How supranational regulators keep companies in line: Analysis of the enforcement styles of EU agencies

The implementation of EU policy is traditionally the turf of its member states, with the European Commission monitoring and enforcing member state compliance. However, enforcement activities towards private entities are increasingly conducted by supranational institutions such as EU agencies. EU agencies have acquired formal powers to impose stringent measures on private actors, including revoking market authorisations and imposing financial penalties. They can furthermore also use facilitative measures such as mitigation plans and clarifying regulatory requirements to achieve compliance with EU regulation. It is, however, not clear how EU agencies apply their formal enforcement powers towards private actors in practice. On the one hand, research shows that EU integration leads to a legalistic, adversarial enforcement style, implying that EU agencies employ formal, coercive measures in their enforcement. On the other hand, traditional approaches to EU compliance suggest that coercive measures are used as a last resort due to politicization. Combining elite interviews with EU agency officials and market participants with document analysis, we analysed the enforcement styles applied by the European Union Aviation Safety Agency (EASA), the European Securities and Markets Authority (ESMA) and the European Medicines Agency (EMA). Specifically, we assess whether their enforcement practices are high or low in coercion and formalism. Contrary to traditional EU compliance approaches, we find that EU agencies apply a moderately formalistic and coercive approach to supervision, but not necessary in their enforcement. Furthermore, while EU agencies are generally reluctant to impose coercive penalties regarding organisational approval violations, they do not shy away from applying more coercive measures in relation to non-conform products. We, however, do find that where coercive, punitive enforcement practices are employed, this is driven by a lack of discretion to employ alternative measures. The latter implies the validity of the expectation that EU integration has caused supranational enforcement to adhere closely to formal legal rules to overcome agency drift and ensure consistency. However, the fact that EU agencies often rely on less coercive and informal enforcement practices, implies that the politicized nature of supernational enforcement may prevent such practices to be adopted more broadly.