The Commission had proposed a regulation to create a new European legal form for cooperatives called the "European cooperative society" on the basis of what was then Article 100a EEC (now, Article 95 EC)
The Court dismissed the European Parliament's action which was supported by the Commission.
It held that Regulation 1435/2003 leaves unchanged the different national laws already in existence and creates a new form of cooperative society in addition to the national forms. Consequently it does not approximate the laws of the member States applicable to cooperative societies. Thus, Article 95 EC was not the correct legal base for such a measure.
The Court held that Article 95 EC empowers the Community legislature to adopt measures to improve the conditions for the establishment and functioning of the internal market and they must genuinely have that object, contributing to the elimination of obstacles to the economic freedoms guaranteed by the Treaty, which include the freedom of establishment (see, in particular, Case C-491/01 British American Tobacco (Investments) and Imperial Tobacco at paragraph 60). Recourse to Article 95 EC as a legal basis is also possible if the aim is to prevent the emergence of obstacles to trade resulting from heterogeneous development of national laws; the emergence of such obstacles must, however, be likely and the measure in question must be designed to prevent them.
On the other hand, the Court held that Article 308 EC may be used as the legal basis for a measure only where no other provision of the Treaty gives the Community institutions the necessary power to adopt it (See, Case C-350/92 Spain v Council at paragraph 26). The Court reiterated that Article 308 EC was properly used as the basis for creating new intellectual property rights in addition to national rights (Case C-377/98 Netherlands v Parliament and Council at paragraph 24).