Michelangelo SA and Piazza SA are two Italian companies which produce quality fabrics made out ofcotton. Because of the competition from cheap fabric imports from Asia, Michelangelo SA has for manyyears received a large subsidy from the European Commission, while Piazza SA has benefited from azero-rated levy on its imports of cotton.The European Commission has recently agreed with the Chinese Department of Trade that in return forending subsidies for fabric manufacturers, China will lift its embargo on imports of European cheese.Under pressure from the French Government the Commission agrees to this proposal. As a result, inMay 2023, the Commission adopted (fictitious) Regulation 50/2023 the purpose of which is tocompletely abolish, with immediate effect, all subsidies to cotton fabric manufacturers in the EU andauthorising Member States to introduce a levy of 10 per cent on imports of cotton.In August 2023, both Michelangelo SA and Piazza SA had signed lucrative contracts to supply cotton toModerno SA, a company which produces luxury clothing made out of cotton. However, as result ofRegulation 50/2023 they have had to cancel the contracts because without the subsidy and the zero-rated levy on cotton imports, they cannot produce the material at the price agreed in the contract.Moderno SA has stated that it intends to sue both Michelangelo SA and Piazza SA for breach of contract.Michelangelo SA and Piazza SA consult you because they wish to challenge Regulation 50/2023 underArticle 263 TFEU, and to seek compensation against the Commission. Advise them on the followingpoints:(a) whether, if at all, they will have locus standi under Article 263 TFEU. In your answer you areexpected to apply the relevant case law of the Court of Justice of the European Union and givereasons for your advice.Continued on next page

LEICESTER LAW SCHOOL(b) on what grounds under Article 263 TFEU they could bring any challenge, and(c) whether they would be successful in obtaining any further remedy against the Commission. Inyour answer you are expected to apply the relevant case law of the Court of Justice of theEuropean Union and give reasons for your ad