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This Living Review deals with the division of competences between the EU and its member states in a multilevel political system. The article summarises research on the relations between the EU and the national and sub-national levels of the member states. It provides an overview on normative and theoretical concepts and empirical research. From the outset, European integration was about the transfer of powers from the national to the European level, which evolved as explicit bargaining among governments or as an incremental drift. This process was reframed with the competence issue entering the agenda of constitutional policy. It now concerns the shape of the European multilevel polity as a whole, in particular the way in which powers are allocated, delimited and linked between the different levels. The article is structured as follows: First of all, normative theories of a European federation are discussed. Section 2 deals with different concepts of federalism and presents approaches of the economic theory of federalism in the context of the European polity. The normative considerations conclude with a discussion of the subsidiarity principle and the constitutional allocation of competences in the European Treaties. Section 3 covers the empirical issue of how to explain the actual allocation of competences (scope and type) between levels. Integration theories are presented here only in so far as they explain the transfer of competence from the national to the European level or the limits of this centralistic dynamics. Normative and empirical theories indeed provide some general guidelines and conclusions on the allocation of competences in the EU, but they both contradict the assumption of a separation of competences. The article therefore concludes that politics and policy-making in the EU have to be regarded as multilevel governance (Section 4). The main theoretical approaches and results from empirical research on European multilevel governance are presented before the article concludes with recommendations for further discussion and research in the field (Section 5). Following Fritz Scharpf, it is recommended that research on the vertical allocation of competences and the application of shared competences in the European multilevel governance should stop searching for holistic approaches (grand theory) explaining unique features of the European political system; instead, research will best succeed when relying on a variety of simpler theories and models to describe European governance modes.

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