EU LAW Economic Integration & Free Movement Of Goods

higher rate of tax on bananas than other fruit such as apples/pears products not similar because of different characteristics but products were in competition the higher tax on bananas afforded indirect protection to home-grown fruit

Comm v UK (wine and beer)

The Court of Justice has used a number of different tests to determine whether goods are in competition. Sometimes the Court has applied an economic test based on the cross elasticity of demand. However the Court will also take a range of other factors into account.

The best way to explain the way the Court has approached this issue is to look at the case of Commission v UK.

The facts are as follows:

In the late 1970s the UK government imposed a higher rate of tax on wine than it did on beer. Wine was taxed at £3.25 a gallon whereas beer was taxed at 61p a gallon. In terms of production it was clear that the veast majority of wine consumed in the UK was produced in France Germany and Italy wheras beer was largely made in the UK. The Commission challenged this arguing UK was in braech of Art 90.

The UK argued that the products were neither similar under art 90(1) or in competition with one another under art 90(2).

The ECJ agreed that the producst were not similar in view of the different manufacturing processes and the natural properties of the respective drinks.

However the ECJ held that the products were in competition with one another and thus UK had breached Art 90”92). The reasoning is as follows:

The Court considered whether consumers would substitute one product for another- that is drink wine instead of beer. The Court didn’t just consider whether existing consumers would substitute the producst but also whether future future consumers could substitute a product and stated that . Eventually the ECJ ruled that there was a comptitive relationship between beer and the most accessible wines (lightest and the cheapest)

 Inconsistency between the various rulings of the Court 

Uncertainty

 Mechanical application of the Dassonville formula  Danger

of supranational law encroaching on traditional rules, habits

and uses of Member State law

 Increased burden on the workload of the ECJ

 The legitimacy of the ECJ was being eroded by its degree of

involvement in judging the reasonableness of any market

regulation, something that always involves a sizeable margin of

discretionary powers and complex economic and social policy

analysis. Should the ECJ have the power to examine and, even,

require the non-application of equal-burden national measures?

 Abusive use of EC law by traders: See para. 14 of Keck: “In

view of the increasing tendency of traders to invoke Article

30 [now Article 34] of the Treaty as a means of challenging

any rules whose effect is to limit their commercial freedom

even where such rules are not aimed at products from other

Member States, the Court considers it necessary to re-examine
and clarify its case law on this matter”.

Is Article 34 TFEU intended to liberalise inter-state trade?

OR

Is Article 34 TFEU intended to encourage the unhindered pursuit of commerce in

the individual Member States, as some traders would argue?

This question was posed by Advocate General Tesauro in Case C-292/92,
Hünermund, [1993] ECR I-6787.

are those concerning who sells

a product; when a product can be sold; where a product can be sold; and how
(e.g. with a gift) a product can be sold.

 Should market circumstances rules be included within the scope of

Article 34 TFEU?

 Do they impede the achievement of the aim of Article 34 TFEU?
 What is the aim of Article 34 TFEU?

Keck, Para. 16:

“However, contrary to what has previously been decided, the application to

products from other Member States of national provisions restricting or prohibiting

certain selling arrangements is not such as to hinder directly or indirectly, actually

or potentially, trade between Member States within the meaning of the Dassonville

judgment … provided that those provisions apply to all affected traders operating

within the national territory and provided that they affect in the same manner, in

law and in fact, the marketing of domestic products and of those from other
Member States”.

Keck and market access

Keck, Para. 17:

“Where those conditions are fulfilled, the application of such rules to the sale of

products from another Member State is not by nature such as to prevent their

access to the market or to impede access any more than it impedes the access of

domestic products. Such rules therefore fall outside the scope of [Article 34] of the
Treaty”

• Measures imposing product requirements (dealt under Cassis)

• Measures regulating selling arrangements (marketing circumstances) (dealt

under Keck)

• NB. If a measure falls in neither of these two categories, it is only assessed

under Dassonville (see, for instance, Case C-421/09, Humanplasma, Judgment
of 9 December 2010)

Keck seems to have provided a clear division of regulatory competence: the

producing State makes the initial choices about the level of regulation of product

requirements; while the importing State makes the initial choice for its territory

about the level of regulation of certain selling arrangements (sales, marketing,
distribution, and consumption).

• No definition provided by the ECJ

• The Court recently summarised its case-law on what can be considered a

selling arrangement in Case C-71/02, Karner, [2004] ECR I-3025, para. 38:

“Provisions concerning inter alia the place and times of sale of certain

products and advertising of those products as well as certain marketing

methods are provisions governing selling arrangements within the meaning of
Keck and Mithouard”.

 National rules on the times and places at which goods could be sold

(Joined Cases C-69 & 258/93, Punto Casa, [1994] ECR I-2355 and

Joined Cases C-418-421/93, 460-462/93, 464/93, 9-11/94, 14-15/94,

Semeraro Casa, [1996] ECR I-2975)

 Rules requiring retailers of particular goods to have actual premises in

the locality (Case C-253/98, TK-Heimdienst, [2000] ECR I-151 and

Case C-322/01, DocMorris, [2003] ECR I-14887)

 Rules obliging retailers to be licensed (Case C-20/03, Burmanjer,

[2005] ECR I-4133)

 Rules prohibiting selling in private homes (Case C-441/04, A-Punkt,

[2006] ECR I-2093)

 Restrictions on advertising (Case C-412/93, Leclerc-Siplec, [1995]
ECR I-179

 Case C-368/95, Familiapress, [1997] ECR I-3689.

11. ...even though the relevant national legislation is directed against a

method of sales promotion, in this case it bears on the actual content of the products,

in so far as the competitions in question form an integral part of the magazine in

which they appear. As a result, the national legislation in question as applied to the

facts of the case is not concerned with a selling arrangement within the meaning of

the judgment in Keck and Mithouard.

12. Moreover, since it requires traders established in other Member States

to alter the contents of the periodical, the prohibition at issue impairs access of the

products concerned to the market of the Member State of importation and

consequently hinders free movement of goods. It therefore constitutes in principle a

measure having equivalent effect within the meaning of Article [34] of the Treaty.
 Cases C-158 & 159/04, Alfa Vita Vassilopoulos, [2006] ECR I-8135

• The Court did not specify which of its previous case-law was overruled

(“contrary to what was previously decided”)

• The Court did not provide a clear definition of the term “selling arrangements”

• The distinction between product requirements and certain selling arrangements

is not clear (see Familiapress etc)

• The phrase “selling arrangements” is too narrow in that it cannot be

interpreted to include certain rules which are – obviously- harmless to interstate

trade (such as non-discriminatory restrictions on planning and building in

the green belt and non-discriminatory restrictions on use)

• The phrase “selling arrangements” is, also, sometimes too broad in that it

catches certain “dynamic” measures (such as restrictions on advertising and

therefore takes them outside the scope of Article 34 TFEU even though they
do affect inter-state trade)

• Static selling arrangements: rules relating to the hours at which shops may be

open, the length of time for which people may work, or the type of premises in

which certain goods may be sold.

• Non-static or dynamic selling arrangements include the ways in which a

manufacturer chooses to market this specific product¸ through a certain form

of advertising, free offers, and the like.

The objection to taking the latter out of Article 34 TFEU is that they may

relate more closely to the definition of the product itself. Non-static selling

arrangements can form an integral aspect of the goods, in much the same way

as do rules relating to composition, labelling, or presentation.



Yet, it is clear from Keck that the Court regarded some such rules as selling

arrangements and hence outside Article 34.

E.G.
Case C-412/93, Leclerc-Siplec, [1995] ECR I-179

Condition II of Keck: “Does not affect in the same manner, in law and in fact, the
marketing of domestic products and of those from other Member States”

Joined Cases C-34-36/95, De Agostini¸[1997] ECR I-3843

Case C-405/98, Gourmet, [2001] ECR I-1795

other measure which hinders access of products originating in other Member States to the
market of a Member State is also covered by that concept”. (emphasis added)

Facts: This was an Article 267 TFEU reference which was made by a Swedish court

to the ECJ in the course of criminal proceedings brought by the Swedish Public

Prosecutor’s Office against Mr Mickelsson and Mr Roos for failure to comply with a

Swedish prohibition on the use of personal watercraft. The main issue on the facts

was whether Swedish regulations which provided that jet-skis may be used only in

general navigable waterways and in waters designated through rules made by the local

authority, were contrary to Article 34 TFEU.

Held: The contested rules amounted to an MEQR and thus fell within the scope of

Article 34 TFEU because they had the effect of hindering the access to the Swedish

market of personal watercraft. HOWEVER, they could be justified on a number of

grounds, provided that certain conditions were satisfied. So, Sweden can maintain

those rules provided that the conditions mentioned in para. 39 of the judgment are
fulfilled.

Facts: This was an Article 267 TFEU reference which was made by a Hungarian court

to the ECJ in the course of proceedings between Ker-Optika (a company selling

contact lenses via its Internet site) and the South Transdanubian Regional Directorate

of the national public health and medical services, concerning an administrative

decision whereby the latter prohibited Ker-Optika from selling contact lenses in

Hungary via the Internet. The decision was based on Hungarian legislation which

provided that contact lenses could only be sold in shops which specialise in the sale of

medical devices. The question that was referred, therefore, was whether national

legislation which authorises the sale of contact lenses only in shops which specialise

in the sale of medical devices and which prohibits, consequently, the sale of contact

lenses via the Internet, is contrary to Article 34 TFEU.

Held: Articles 34 and 36 TFEU preclude national legislation which authorises the
selling of contact lenses only in shops which specialise in medical devices.

Para. 16 of Keck:

By contrast, contrary to what has previously been decided, the application to

products from other Member States of national provisions restricting or prohibiting

certain selling arrangements is not such as to hinder directly or indirectly, actually

or potentially, trade between Member States within the meaning of the Dassonville

judgment, so long as those provisions apply to all relevant traders operating within

the national territory and so long as they affect in the same manner, in law and in

fact, the marketing of domestic products and of those from other Member States.

Para. 17 of Keck:

Provided that those conditions are fulfilled, the application of such rules to the sale

of products from another Member State meeting the requirements laid down by that

State is not by nature such as to prevent their access to the market or to impede

access any more than it impedes the access of domestic products. Such rules

therefore fall outside the scope of Article [34] of the Treaty.

Para. 51 of Ker-Optika:

For that reason, the application to products from other Member States of national

provisions restricting or prohibiting certain selling arrangements is such as to hinder

directly or indirectly, actually or potentially, trade between Member States for the

purposes of the case-law flowing from Dassonville, unless those provisions apply to

all relevant traders operating within the national territory and affect in the same

manner, in law and in fact, the selling of domestic products and of those from other

Member States. The application of such rules to the sale of products from another

Member State meeting the requirements laid down by that State is by nature such as

to prevent their access to the market or to impede such access more than it impedes
the access of domestic products.

 The Treaty Derogations (Article 36 TFEU)

 The mandatory requirements (recognised, for the first time, in Cassis
de Dijon)

The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions on imports, exports

or goods in transit justified on grounds of public morality, public policy or public security; the

protection of health and life of humans, animals or plants; the protection of national treasures

possessing artistic, historic or archaeological value; or the protection of industrial and commercial

property.

Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a
disguised restriction on trade between Member States.

 It must serve one (or more) of the important interests that are included

on the Article 36 TFEU list (e.g. public health or public morality)

 It must be proportionate

 It must not constitute a means of arbitrary discrimination or a disguised
restriction on trade between Member States

• The Court has interpreted Article 36 TFEU strictly

• The burden of proof is on the national authorities to demonstrate that their

measures are suitable and necessary to give effective protection to the

interest(s) on which they rely from the Article 36 list (Case C-17/93,

Openbaar Ministerie v. Van der Veldt, [1994] ECR I-3537).

• The derogations cannot be used to serve economic objectives: Case 7/61,

Commission v. Italy (pork), [1961] ECR 317, at p. 329: Article 36 TFEU is

“directed to eventualities of a non-economic kind”. Such objectives as the

promotion of employment or investment, curbing inflation, and controlling the

balance of payments fall outside Article 36 TFEU.

• The Article 36 TFEU list is EXHAUSTIVE and has never been amended since
the original drafting of the EEC Treaty

“Such prohibitions or restrictions shall not, however, constitute a means of arbitrary

discrimination or a disguised restriction on trade between Member States”.

Purpose of this proviso:

Compare .....

Case 34/79, Henn and Darby, [1979] ECR 3795

....... With
Case 121/85, Conegate, [1986] ECR 1007

The Court has long emphasised that the measures taken by the Member States must

not only genuinely serve the purpose for which they are intended but they must also

be proportionate to the risk presented by the import, with the burden of proving
proportionality resting with the defendant State.

• A test of suitability

• A test of necessity - One important part of the “necessity” limb is the question

whether there are any other less restrictive means of producing the same result

(the most usual example are cases involving a reliance on consumer protection

where the Court says that a less restrictive alternative will be labelling -- Case

120/78, Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein

(“Cassis de Dijon”), [1979] ECR 649); Case 178/84, Commission v. Germany
(beer), [1987] ECR 1227.

 NOTE!!!!!!!!!! A Member State can invoke the Article 36 TFEU derogations

only in the absence of Union legislation, provided that the harmonisation occupies

the field to the exclusion of Member State competence (Case 190/87, Moorman,

[1988] ECR 4689). In Case C-5/94, Hedley Lomas, [1996] ECR I-2553, para. 18,

the Court said: “recourse to Article [36] is no longer possible where Community

Directives provide for harmonisation of measures necessary to achieve the specific

objective which would be furthered by reliance upon this provision”.

See, also, pp. 704-705 of Craig and de Burca, EU Law: Text, Cases and Materials
(Oxford, OUP, 2008).

• The Article 36 TFEU list of derogations is EXHAUSTIVE:

 Public morality

 Public policy

 Public security

 Protection of health and life of humans, animals or plants

 Protection of national treasures possessing artistic, historic or archaeological

value
 Protection of industrial and commercial property

Narrow interpretation in the context of goods: Case 177/83, Ringelhan, [1984]

ECR 3651, the Court made it clear that “public policy” does not include
considerations of consumer protection.

Only relied on successfully once: Case 7/78, Thompson, [1978] ECR 2247

The public policy derogation has increasingly been invoked

UNSUCCESSFULLY by Member States to justify interference with the free

movement of goods caused by protesters. See, e.g. Case 231/83, Cullet v.
Leclerc, [1985] ECR 305.

Case 72/83, Campus Oil, [1984] ECR 2727

“the aim of ensuring a minimum supply of petroleum products at all times was to be regarded as

transcending purely economic considerations”.

“It should be stated ... that petroleum products, because of their exceptional importance as an energy

source in the modern economy, are of fundamental importance for a country’s existence since not only

its economy but above all its institutions, its essential public services and even the survival of the

inhabitants depend upon them. An interruption of supplies of petroleum products, with the resultant

dangers for the country’s existence, could therefore seriously affect the public security that Article [36]
allows States to protect”.