The CJEU's reasoning

Free movement of goods (FMG) is one of the four cornerstones of the internal market. There are various potential fiscal obstacles to FMG in the European Union such as customs duties, charges having equivalent effect to customs duties and taxation on imported goods. There are also non-fiscal barriers to trade and one important element for safeguarding FMG is to ensure that these non-pecuniary obstacles, such as quantitative restrictions (QRs) and measures having equivalent effect (MEQRs), prohibited under Article 34 of the Treaty for the Functioning of the European Union (TFEU), are limited to those circumstances where it is justified with good reason. This essay briefly discusses the law on indistinctly applicable MEQRs, culminating in an analysis of the reasoning surrounding the seminal case of Keck and how future cases have reacted to the precedent therein contained.

The Court of Justice of the European Union (CJ) defined QRs in the case of Geddo as “measures which amount to a total or partial restraint of, according to circumstances, imports, exports or goods in transit”. A Member State can infringe this rule by either imposing restrictions or failing to take action where it is under a duty to act. However, trade can still be hindered by Member States using methods other than a clear quantitative restriction, and these are caught by Article 34 TFEU as MEQRs.

The CJ defined MEQRs in the case of Dassonville as “All trading rules enacted by Member States (MS) which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade”. Using the now defunct but still guiding Directive 70/50, MEQRs can be split into those which are distinctly applicable (meaning imports are identified and disadvantaged) and those which are indistinctly applicable (meaning the measure covers equally imports and domestic goods). The definition of MEQRs in Dassonville is very wide as trade need not be affected and so consequently the CJ restricted the definition in Cassis, creating two principles. Firstly, the ‘presumption of mutual recognition’ which is the idea that if goods are marketed and sold in one state, there is a presumption that the goods should be marketable in all states. The important second rule is the ‘rule of reason’ which allows Member States to rebut the above presumption of mutual recognition if there is a good enough reason. The reasons, known as ‘mandatory requirements’ can include consumer protection, environmental protection, and fair competition; but crucially the reason must be necessary and proportionate.

Whilst the ‘rule of reason’ principle has to be weighed against the presumption of mutual recognition when looking at MEQRs, it effectively provides another defence for Member States (MS) with a wider scope for justification than the usual derogations under Article 36 TFEU, though its use is confined to indistinctly applicable measures. Nevertheless critics argue that the rules in Cassiswere overused by importers in cases where indistinctly applicable measures restricted the sale of products without imposing additional requirements on the products themselves. This provided one of the reasons for the judgment in Keck (see below) along with the need to clarify some inconsistencies arising out of, amongst other things, the Sunday Trading cases.

In Keck the CJ distinguished between ‘product requirements’ and ‘selling arrangements’. ‘Product requirements’ or rules relating to the product itself such as those concerned with shape, size or weight come within the concept outlined in Dassonvilleand would invoke Article 34 thus needing justification lest being prohibited. ‘Selling arrangements’ are measures dealing with where, when, how and by whom goods may be sold and do not invoke Article 34 providing the measure “applied to all relevant traders operating within the national territory and affected in the same manner, in law and in fact, the marketing of domestic products and of those from other MS”. This was aimed at narrowing the ambit of Article 34 in response to the aforementioned increasing tendency of traders to invoke the Article to challenge any rules which were aimed at limiting their commercial freedom. However, this ruling drew much critique concerning whether or not it was appropriate.

Advocate General Jacobs (Jacobs AG) argues in his Opinion in Leclerc-Siplecthat although the decision in Keck was satisfactory, the reasoning was not for two reasons. First, it is inappropriate to make rigid distinctions between categories of rules, and to apply different tests depending on the category to which particular rules belong. The fact that a measure can be labelled as a selling arrangement does not limit its ability to restrict trade as Jacobs AG illustrates. A small restriction on advertising such as the one in Hunermund may have little impact on inter-state trade whereas a total ban on advertising is likely to have a much larger impact. The problem is thus one of degree rather than one of quality. Further, as marketing mixes become more complex, it may become difficult to discern appearance and content (governed by Cassis) from its advertising (how a product is sold). The cases of Mars and Familiapress highlight the issues which can be caused by a formalist approach when faced with situations where the distinction is blurred.

Secondly, Jacobs AG opines that the exclusion from the scope of Article [34] of measures which “affect in the same manner, in law and in fact, the marketing of domestic products and those from other Member States amounts to introducing, in relation to restrictions on selling arrangements, a test of discrimination”. He argues that a discriminatory test is inappropriate because it may lead to a situation where overall trade is restricted, but due to the absence of discrimination (that is both domestic producers and importers lose out) the measure would not invoke Article 34. Further, product requirements would always be caught by Article 34 even in circumstances when there is no domestic production of similar or competing goods. Jacobs AG suggests this does not fit with the intention of FMG which is to prevent unjustified obstacles to trade between MS; a restriction to inter-state trade does not cease to exist simply because a similar restriction limits domestic trade22.

Rather than a discriminatory test, Jacobs AG propounds a single test in line with the original purpose of Article 34 against which all restrictions should be measured; a de minimis market access approach. Some authors believe that a market access test would be more effective at catching all restrictive barriers, regardless of discrimination. Recent case law suggests that the CJ are shifting towards a market access approach. After deciding some cases based on a discrimination test such as Punto Casa SpA, Tankstation and Commission v Greece ‘Processed milk’ and apparently clarifying the problem of Sunday opening hours, the CJ additionally assessed potential effects on intra-state trade in TK-Heimdienst, Gourmet and De Agostini. Further in the reasoning of Doc Morris, although it seemed prima facie a discrimination test, authors claim a market access test pervaded the judgment and that where market access is significantly impeded, the CJ are more likely to find discrimination and thus a breach of Article 34 and vice versa. Finally, it is argued by some that the CJ today uses the categories of ‘selling arrangements’ and ‘all other measures’ rather than the Keckcategories of ‘selling arrangements’ and ‘product requirements’. This per se could be seen as evidence that the reasoning in Keck was inappropriate and that the CJ have amended their approach accordingly.

On the contrary, there are some authors who favourably received the reasoning in Keck and who argue that the scope of Article 34 “should be confined to a prohibition on discriminatory rules since the Treaty does not contain any indication as to the preferred level or type of regulation”. Put simply, the Treaty merely requires that MS do not create obstacles to FMG by having rules which are discriminatory. In further support of Keck, MS can control their national interests and a body of case law fit in well with the formula.

Peter Oliver, an academic, acknowledges the ambiguity and defects of the Keck judgment and its reasoning commenting that it did not define or make clear the concept of restrictions on selling arrangements, nor did it explain how the term ‘certain’ confined the category of selling arrangements. It did not elude to whether the rules (on selling arrangements and product requirements) were mutually exclusive or how residual measures were to be regarded. For example, a ban on a product’s sale or use, inspections and registrations are measures which do not fall into either ‘product requirements’ or ‘selling arrangements’ and the rules to which these apply are not clear. It is also contended that the first part of the two-fold test in Keck that the measure must “apply to all relevant traders operating within the national territory” has never been explained or decisively used in a case and thus is redundant.

Notwithstanding these defects, Oliver makes it clear that while the criticisms submitted by Jacobs AG contained merit, a more satisfactory test was not proposed. Oliver criticised the school of thought advocating a single test for discerning whether a measure constituted a substantial “barrier to market access”, claiming it is inherently nebulous and would still cause problems of legal uncertainty. Distinguishing between identifying market access barriers and measuring an impact on the volume of sales could prove difficult and anyhow a single test is arguably a restatement of the Dassonvilleformula, and as evidenced in the Sunday Trading cases, this no longer suffices.

In summary, the measures in Keck, Leclerc-Siplecand the Sunday trading cases may not have prevented market access, but there are examples of circumstances where such a measure may prevent market access. Further, non-discriminatory rules which hinder free movement of labour and market access have been outlawed, supporting the argument for market access rule over a discriminatory one. Keck is now described as a “dangerous wider principle” which takes “insufficient account of the dynamic process of opening up markets previously fragmented along national lines”. The reasoning in Keck is seen as unnecessarily formalist and while the rigidity of the approach may have been appropriate as a response to the preceding case law, particularly the problems with the rules in Cassis, a more sophisticated approach can be discerned from emerging case law.

Bibliography

Books

Barnard. C (2013) The substantive law of the EU (Oxford: Oxford University Press)

Bewick, D., Garside, C., Lawson, A. and Sharp, K. (2013) Cases and Materials on Law of the European Union (London, BPP Learning Media)

Dashwood, A., Dougan, M., Rodger, B., Spaventa, E., Wyatt, D. (2011) European Union Law (Oxford, Hart Publishing) page 420

Foster. N (2012) EU Law Directions (Oxford, Oxford University Press) page 299

Horspool, M. and Humphreys, M. (2012) European Union Law (Oxford, Oxford University Press)

Toner, H. (2004) Partnership Rights, Free Movement, and EU Law (Oxford, Hart Publishing)

Woods. L (2004) Free Movement of goods and services within the European Community (Aldershot, Ashgate Publishing)

Journal Articles

Oliver, P. ‘Of Trailers and Jet Skis: Is the Case Law on Article 34 TFEU Hurtling in a New Direction?’ (2011) 33 Fordham International Law Journal 5 page 1442.

Weatherill, S. ‘After Keck: Some thoughts on how to clarify the clarification’ (1996) 33 Common Market Law Review

Case Law

Commission v Greece (‘Processed Milk’) [1995] ECR I-1621

Deutscher Apothekerverband eV v 0800 DocMorris NV, Jacques Waterval [2003] ECR I-4887

Geddo v Ente [1973] ECR 865

Hunermund v Landesapothekerkammer Baden-Wurttemberg [1993] ECR I-6787

Keck and Mithouard [1993] ECR I-6097

Konsumentombudsmannen (KO) v De Agostini (Svenska) Forlag AB [1997] ECR I-3843.

Konsumentombudsmannen v Gourmet International Products Aktiebolag [2001] ECR I-1795

Procureur du Roi v Benoit and Gustave Dassonville [1974] ECR 837

Punto Casa Srl [1994] ECR I-2355

Rewe-Zentral AG v Bundesmonopolverwaltung fur Branntwein (‘Cassis de Dijon’ or ‘Cassis’) [1979] ECR 649

Societe d’Importation Edouard Leclerc-Siplec v TF1 Publicite SA and M6 Publicite SA [1995] ECR I-179

Stoke on Trent City Council v B&Q Plc [1993] 2 WLR 730

Tankstation‘t Heustke vof J. B. E. Boermans [1994] ECR I-2199

TK-Heimdienst Sass GmbH [2000] ECR I-151

Torfaen BC v B&Q Plc [1990] 3 CMLR 455

Union Royale Belge des Societes de Football Association v Bosman [1995] ECR I-4921

Verein gegen Unwesen in Handel und Gewerbe Koln v Mars GmbH [1995] ECR I-1923

Vereinigte Familiapress Zeitungsverlags und Vertreibs GmbH v Heinrich Bauer Verlag [1997] ECR 1-3689

Legislation

Article 34 TFEU

Article 36 TFEU

Directive 70/50

Footnotes

Horspool, M. and Humphreys. M (2012) European Union Law (Oxford, Oxford University Press) page 271

Article 34 TFEU

Horspool, M. and Humphreys. M (2012) European Union Law (Oxford, Oxford University Press) page 270.

Keck and Mithouard [1993] ECR I-6097.

Geddo v Ente [1973] ECR 865.

Horspool, M. and Humphreys. M (2012) European Union Law (Oxford, Oxford University Press) page 291.

Procureur du Roi v Benoit and Gustave Dassonville [1974] ECR 837.

Directive 70/50.

Rewe-Zentral AG v Bundesmonopolverwaltung fur Branntwein (‘Cassis de Dijon’ or ‘Cassis’) [1979] ECR 649.

Rewe-Zentral AG v Bundesmonopolverwaltung fur Branntwein (‘Cassis de Dijon’ or ‘Cassis’) [1979] ECR 649.

Article 36 TFEU.

Horspool, M. and Humphreys. M (2012) European Union Law (Oxford, Oxford University Press) page 302.

Bewick, D., Garside, C., Lawson, A. and Sharp, K. (2013) Cases and Materials on Law of the European Union (London, BPP Learning Media) page 74.

Torfaen BC v B&Q Plc [1990] 3 CMLR 455.

Stoke on Trent City Council v B&Q Plc [1993] 2 WLR 730.

Horspool, M. and Humphreys. M (2012) European Union Law (Oxford, Oxford University Press) page 311.

Foster. N (2012) EU Law Directions (Oxford, Oxford University Press) page 299.

Woods. L (2004) Free Movement of goods and services within the European Community (Aldershot, Ashgate Publishing) page 83.

Societe d’Importation Edouard Leclerc-Siplec v TF1 Publicite SA and M6 Publicite SA [1995] ECR I-179 paragraph 38.

Hunermund v Landesapothekerkammer Baden-Wurttemberg [1993] ECR I-6787.

Societe d’Importation Edouard Leclerc-Siplec v TF1 Publicite SA and M6 Publicite SA [1995] ECR I-179 paragraph 38.

Dashwood, A., Dougan, M., Rodger, B., Spaventa, E., Wyatt, D. (2011) European Union Law (Oxford, Hart Publishing) page 420.

Horspool, M. and Humphreys. M (2012) European Union Law (Oxford, Oxford University Press) page 317.

Verein gegen Unwesen in Handel und Gewerbe Koln v Mars GmbH [1995] ECR I-1923.

Vereinigte Familiapress Zeitungsverlags und Vertreibs GmbH v Heinrich Bauer Verlag [1997] ECR 1-3689.

Societe d’Importation Edouard Leclerc-Siplec v TF1 Publicite SA and M6 Publicite SA [1995] ECR I-179 paragraph 39.

Dashwood, A., Dougan, M., Rodger, B., Spaventa, E., Wyatt, D. (2011) European Union Law (Oxford, Hart Publishing) page 421.

Societe d’Importation Edouard Leclerc-Siplec v TF1 Publicite SA and M6 Publicite SA [1995] ECR I-179 paragraph 42.

Weatherill, S. ‘After Keck: Some thoughts on how to clarify the clarification’ (1996) 33 Common Market Law Review

Dashwood, A., Dougan, M., Rodger, B., Spaventa, E., Wyatt, D. (2011) European Union Law (Oxford, Hart Publishing) page 425.

Punto Casa Srl [1994] ECR I-2355.

Tankstation‘t Heustke vof J. B. E. Boermans [1994] ECR I-2199

Commission v Greece [1995] ECR I-1621.

Horspool, M. and Humphreys. M (2012) European Union Law (Oxford, Oxford University Press) page 313.

Dashwood, A., Dougan, M., Rodger, B., Spaventa, E., Wyatt, D. (2011) European Union Law (Oxford, Hart Publishing) page 424.

TK-Heimdienst Sass GmbH [2000] ECR I-151.

Konsumentombudsmannen v Gourmet International Products Aktiebolag [2001] ECR I-1795.

Konsumentombudsmannen (KO) v De Agostini (Svenska) Forlag AB [1997] ECR I-3843.

Deutscher Apothekerverband eV v 0800 DocMorris NV, Jacques Waterval [2003] ECR I-4887.

Barnard. C (2013) The substantive law of the EU (Oxford: Oxford University Press) page 137.

Oliver, P. ‘Of Trailers and Jet Skis: Is the Case Law on Article 34 TFEU Hurtling in a New Direction?’ (2011) 33 Fordham International Law Journal 5 page 1442.

Dashwood, A., Dougan, M., Rodger, B., Spaventa, E., Wyatt, D. (2011) European Union Law (Oxford, Hart Publishing) page 421.

Horspool, M. and Humphreys. M (2012) European Union Law (Oxford, Oxford University Press) page 317.

Oliver, P ‘Of Trailers and Jet Skis: Is the Case Law on Article 34 TFEU Hurtling in a New Direction?’ (2011) 33 Fordham International Law Journal 5 page 1439.

Ibid page 1439.

Dashwood, A., Dougan, M., Rodger, B., Spaventa, E., Wyatt, D. (2011) European Union Law (Oxford, Hart Publishing) page 427.

Oliver, P. ‘Of Trailers and Jet Skis: Is the Case Law on Article 34 TFEU Hurtling in a New Direction?’ (2011) 33 Fordham International Law Journal 5 page 1443.

Ibid page 1445.

Ibid page 1445.

Toner, H. (2004) Partnership Rights, Free Movement, and EU Law (Oxford, Hart Publishing) page 197.

Oliver, P. ‘Of Trailers and Jet Skis: Is the Case Law on Article 34 TFEU Hurtling in a New Direction?’ (2011) 33 Fordham International Law Journal 5 page 1445.

Weatherill, S. ‘After Keck: Some thoughts on how to clarify the clarification’ (1996) 33 Common Market Law Review page 10.

Union Royale Belge des Societes de Football Association v Bosman [1995] ECR I-4921.

Woods, L. (2004) Free Movement of goods and services within the European Community (Aldershot, Ashgate Publishing) page 87.

Woods, L. (2004) Free Movement of goods and services within the European Community (Aldershot, Ashgate Publishing) page 87.

Weatherill, S. ‘After Keck: Some thoughts on how to clarify the clarification’ (1996) 33 Common Market Law Review page 2.