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discriminatory rules

Article 12 of the EC Treaty prohibits discrimination on the basis of nationality and is one of its fundamental provisions. However, on its own it would not suffice to ensure free movement of factors of productions for the simple reason that not all barriers discriminate. For instance, a prohibition on discrimination would make illegal any measure in State A imposing a total ban or a quota on, say, toys from State B. But that provision would not prevent a measure that mandates that all toys sold in State B be packaged in recyclable material, even if such measure can in practice act as a ban or at least make the export of toys to State B more expensive. This difficulty has largely been eliminated in EU law through the concept known as “home country control”. According to this, a product or a service is allowed to access markets of other member states if it has lawfully been made/provided in the state of origin (Home State). Host State rules that present a barrier to this movement will be illegal unless justified by a set of specifically provided rules in the EC Treaty.

Directly discriminatory rules

distinguish between national and imported goods in law and in fact. A prohibition of imports imposed by state A on goods from state B is directly discriminatory but restrictions do not have to take the shape of prohibitions or quotas. A Member State can lead advertising and promoting campaigns that favours domestic products, or it can impose higher prices or more stringent conditions (such as health inspections) on imported goods. The key to discrimination is that domestic products are not subject to the added difficulties, and are therefore put at an advantage.

Indirectly discriminatory rules

that hinder trade do not distinguish in law but do so in fact. They impose a higher burden on the importer due to additional work it has to complete to make the product marketable. Although in law the rules apply equally to domestic producers and importers, in reality the burden is born by importers, the domestic producers already complying with the rules. If, in addition, the product is marketed in a number of member states, the exporter from state A might be subject to as many different regimes as there are countries into which he is hoping to import.

For example, a (fictitious) law in state A is that alcoholic drinks of a particular kind must not contain more than 20% alcohol. Producer from state B makes and regularly exports drinks which contain 25% alcohol. Law in state A applies to all those who wish to market the alcoholic drinks in question – whether they are domestic in origin or foreign. In that respect, in law, they do not discriminate. On the other hand, as a result of their presence, a legally marketed drink from state B either has to be modified and its alcohol contents reduced to only 20% or must be absent from market of state A altogether. EU law, under the circumstances mentioned in the previous paragraph, prohibits this kind of distinction: although the law appears to treat all parties equally, in fact domestic producers are favoured.

When taken into consideration Product requirements and certain selling arrangements

naturally, allegations can be made against any rule that inconveniences the trader, and this includes a very large number of rules. Therefore, in the last of the mentioned cases, Keck, and those that followed it, the Court decided that only rules relating to product requirements (shape, size, colour, etc.) should be illegal, while those relating to selling arrangements (opening hours, staff training requirements, etc.) will mostly not be. The division was an attempt to limit the number of cases to only those situations where, in the absence of discrimination, there is real danger of importer suffering the presence of dual burden.

Justification

Under certain circumstances, member states whose rules have been disapplied may defend them. For rules that discriminate, a defence will be possible under Article 30 which mentions, among other things, public health or public morality. For example, a restriction of import of meat from certain countries will be legal if it has clear medical grounds. A restriction of importation of pornographic material may be justified if such material is normally not available in the said Member State. Non discriminatory rules may be justified not only by reference to Article 30 but also to a Court made list of exceptions which were first set out in the Cassis de Dijon case (Case 120/78 Rewe Zentral AG v Bundesmonopolverwaltung für Branntwein).

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