chalmers et al ch.18 free movement meqr

744

1 Introduction

2 General Defi nition of a Measure

Equivalent to a Quantitative Restriction

(i) Dassonville

(ii) Limits of the notion of an MEQR

(iii) Form of an MEQR

(iv) De minimis

(v) The internal situation

(vi) Article 34 TFEU and private actors

3 Product Standards and Cassis de Dijon

(i) Mutual recognition

(ii) Mandatory requirements

(a) Consumer protection

(b) Protection of the environment

4 Selling Arrangements and Keck

(i) The notion of a selling arrangement

(ii) Unequal effect of selling arrangements

5 Article 35 TFEU and Restrictions on

Exports

Further reading

CONTENTS

18

1 INTRODUCTION

Article 34 TFEU prohibits restrictions on the import of goods from other Member States. Case law has divided measures which may be restrictions into three categories, governed by three important cases, Dassonville , Cassis de Dijon and Keck . The structure of the chapter refl ects this.

Section 2 discusses the umbrella notion of a restriction on imports, which is provided in Dassonville . This case established a very broad scope to Article 34, applying to any measure which impedes imports, however that effect is achieved. A recent case, Alfa Vita , even sug-gests that if a measure results in reduced sales of certain goods this may be enough to bring it within Article 34.

Section 3 discusses the application of Article 34 to product rules. The basis for this applica-tion is provided in Cassis de Dijon . Product rules are rules which require producers to change some aspect of the physical product or its packaging before it may be sold. Examples are rules

The Free Movement of Goods

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745 The Free Movement of Goods

which only allow the sale of foodstuffs made in certain ways, or which limit the kinds of con-tainers that can be used for soft drinks. The Court of Justice held in Cassis de Dijon that even if these rules apply equally to imports and domestic products, they are nevertheless restrictions on imports.

(a) The reason for the ruling was that in practice it is very diffi cult to export to other Member States if one has to amend products to adapt to the different rules in each state.

(b) The judgment created a principle of ‘mutual recognition’ of the adequacy of other Member State laws. It established that goods should only be subject to the regulation of their country of production. The principles of country of origin regulation and mutual recognition are now applied throughout free movement law.

(c) It is possible to derogate from mutual recognition for legitimate and proportionate reasons, but this is strictly policed. It is often argued, for example, that permitting foreign products to be sold when these do not conform to national rules and expectations undermines consumer protection. However, the Court usually fi nds that labelling provides the consumer with suffi cient information and protection, and is a lesser hindrance to trade.

Section 4 discusses Keck and the idea of ‘selling arrangements’. These are rules which regu-late the way products are sold. Examples are advertising and rules on shop opening times. The Court held in Keck that these are generally not restrictions on imports, as long as they do not have a greater effect on imports than on domestic products. States may therefore regulate sell-ing arrangements however they like, so long as the effect on imports and domestic products is the same. Keck is criticised by many because even if selling arrangements do not have an unequal effect, they may still have the effect of hindering trade, by making marketing more diffi cult.

Some principles are common to all categories of restrictions on imports.

(a) Restrictions on imports which discriminate directly between national and foreign goods may only be saved by Article 36 TFEU. This is discussed in Chapter 21 .

(b) Restrictions on imports which are equally applicable (equal on their face, although they may have some unequal effect) will not be prohibited if they are necessary for some legitimate public interest objective (often called a ‘mandatory requirement’) and are proportionate.

(c) Article 34 only applies insofar as measures affect imports. If states wish to burden domestic producers with heavy regulation this is a matter of purely national law. However, in exceptional situations stricter regulation of domestic production may actually give it a reputational advantage, and so be a hindrance to imports.

(d) Article 34 also only applies to public measures, not private ones. However, the notion of public catches all bodies and measures in which the state is implicated or has control, even if the measure is apparently implemented by a private organisation. Moreover, the state has a positive obligation to prevent private parties from obstructing free movement, for example where demonstrators block roads. This may entail sensitive balancing between free movement and fundamental rights to free expression and to demonstrate.

Section 5 discusses Article 35 TFEU, which prohibits restrictions on exports. It has a different logic from Article 34. It only applies to measures which have some greater negative effect on

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746 European Union Law

export sales than on domestic sales. As with Article 34, if these measures are equally applicable they may be saved if they serve a legitimate aim in a proportionate way.

2 GENERAL DEFINITION OF A MEASURE EQUIVALENT

TO A QUANTITATIVE RESTRICTION

Article 34 TFEU provides that:

Quantitative restrictions on imports and all measures having equivalent effect shall be

prohibited between Member States.

A quantitative restriction is a limit on the amount of imports. 1 That limit may be constructed in various ways, by reference to value, or physical quantity, or some other factor. Examples could be a rule permitting only so many cars to be imported per year or limiting imports of cheese to a percentage of total domestic sales. Quantitative restrictions do not arise often any more: their prohibition is too clear.

The second part of Article 34 is rather more important in practice. This prohibits measures which do not actually set a limit to imports, but have the same effect as such a limit. These ‘measures of equivalent effect’ (MEQRs), as they are often called, result in imports being re-duced just as if there was in fact an explicit limit.

The case law on Article 34 consists of attempts to defi ne and explain what constitutes an MEQR. The problems of such a defi nition are twofold. First, an MEQR, by defi nition, produces its import-reducing effects by a more or less indirect path. That can make causation diffi cult to establish. The fi rst problem is therefore to know, as a matter of fact, which measures actually do result in imports being reduced or are likely to do so. In some cases it may be obvious, but other cases are diffi cult. The Court of Justice has dealt with this by drawing broad-brush distinctions of convenience, as will be seen below in the discussions of Dassonville and Keck . 2 The second problem is to decide whether Article 34 is about combating rules with a protectionist effect, or about deregulating economic activity. 3 Many measures restrict or reduce economic activity generally: tax rises, rules on transport and advertising, labour regulation. Such measures are likely, therefore, to reduce imports too. However, they do not specifi cally reduce imports. They do not have any effect on imports that they do not also have on domestic production. On the whole, as will be seen below, the Court excludes such measures from Article 34, although the position is far from entirely clear and recent cases suggest a rethinking may be under way. 4

In the current state of the law, measures potentially within Article 34 can be divided into three groups, each falling within a distinct legal regime. The most recent group consists of mea-sures which concern the way goods are marketed or sold. Whether or not this type of measure is prohibited is decided according to the principles laid down in Keck , discussed later in this chapter. 5 Perhaps the most important group in practice consists of measures concerning the way products are produced or packaged — their physical specifi cations. Whether or not these

1 See Case 2/73 Riseria Luigi Geddo v Ente Nazionale Risi [1973] ECR 865. 2 Case 8/74 Procureur du Roi v Benoît and Gustave Dassonville [1974] ECR 837; Joined Cases C-267/91 and

C-268/91 Keck and Mithouard [1993] ECR I-6097. 3 See Chapter 16 ; Advocate General Tesauro in Case C-292/02 Hünermund v Landesapotheker Baden-Württemburg

[1994] ECR I-6787. 4 See pp. 749–52. 5 See pp. 773–80.

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measures contravene Article 34 is decided according to the principles laid down in Cassis de Dijon , also discussed below. 6 The third group consists of measures which affect imports or trade in some way, but do not fall within the other groups. These are measures which cannot be easily captured by the Cassis defi nition of a product rule or the Keck defi nition of a selling arrangement. The legality of this third group of measures is decided according to the principles in Dassonville . 7 In fact, this is the oldest of the three central goods cases, and is the case which provides the general umbrella defi nition of an MEQR. In the years immediately after it was de-cided, it was the starting point for all questions of free movement of goods. However, now that the specialised sub-regimes of Cassis and Keck are well established, Dassonville has become residual in practice, if not unimportant.

(i) Dassonville

Mr Dassonville was a Belgian trader who bought Scotch whisky in France and imported it to Belgium for sale there. The reason why he did this was that whisky was much cheaper in France than in Belgium. The French, at the time of the case, did not have as high a disposable income as Belgians, and could not be persuaded to pay as much for whisky. Moreover, while whisky was a fairly well-established tipple in Belgium, it was less so in France, where it had to compete against domestic spirits and aperitifs. A common technique used to enter a new market is to sell the product at a low price initially, and whisky producers and retailers did precisely this. The hope was, of course, that eventually the French would come to love whisky and the price could be raised, and large profi ts fi nally made.

However, such market-specifi c pricing is made very diffi cult by Article 34, since what is called parallel trading quickly reduces the price differences. People like Mr Dassonville go and buy the goods in the cheap market and sell in the expensive one, until the prices converge. This is possible because, given Article 34, there should be no obstacles to the trading of goods between states.

Nevertheless, Mr Dassonville encountered a problem in the form of a Belgian law on ‘des-ignations of origin’. The law prohibited the import of products bearing such a ‘designation of origin’ without a certifi cate from the authorities of the state of production to prove that this designation was correct. Thus, whisky labelled as Scotch (from Scotland) could not be imported to Belgium without a certifi cate of origin from the British customs.

For retailers who imported their whisky directly from the United Kingdom this was not a problem, since the whisky would be delivered with the appropriate certifi cate if desired. How-ever, such certifi cates were typically removed at the point of importation, and were no longer attached to the whisky by the time it was on sale within the country. Thus, when Mr Dasson-ville bought his whisky for a good price in France it came without a certifi cate. Moreover, it was diffi cult for him to obtain such a certifi cate since the goods had already left the United Kingdom. He was therefore in possession of Scotch whisky which could not be lawfully sold in Belgium according to Belgian law. He claimed that this law was an MEQR, and in the Court’s judgment it gave what continues to be the standard description of what an MEQR is.

6 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung f ür Branntwein ( Cassis de Dijon) [1979] ECR 649, discussed at pp. 760 et seq .

7 Case 2/73 Riseria Luigi Geddo v Ente Nazionale Risi [1973] ECR 865.

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There are three elements of this judgment worth noting: fi rst, the defi nition in paragraph 5, which continues to be cited in almost unchanged terms, although with the words ‘all trading rules’ replaced in some judgments by the words ‘all rules’ or ‘all measures’. 8 This defi nition is very broad. It extends an MEQR to include measures which have not yet had any actual effect, but may potentially do so, as well as those whose effect on trade is indirect. Article 34 applies to any measure which may somehow hinder interstate trade. Yet, the second aspect of the judgment mitigates this. The Court appears to accept in paragraph 6 that even measures which might fall within its own defi nition may be permitted if they are ‘reasonable’. This notion was later developed and brought to fruition in Cassis de Dijon . As a result, even though paragraph 5 of the judgment establishes a broad scope of supervision of Article 34, some of the measures caught may in fact ultimately escape its prohibition.

Secondly, the breadth of the defi nition can then be understood as an establishment of ju-risdiction. By making Article 34 broad, the Court is granting itself equally broad powers to supervise national measures via the preliminary reference procedure, even if in some cases it will fi nd those measures compatible with the Treaty. This was particularly important in a time where the internal market was in its infancy and national protectionist traditions were

Case 8/74 Procureur du Roi v Benoît and Gustave Dassonville [1974] ECR 837

5. All trading rules enacted by Member States which are capable of hindering, directly or indirectly,

actually or potentially, intra-community trade are to be considered as measures having an effect

equivalent to quantitative restrictions.

6. In the absence of a community system guaranteeing for consumers the authenticity of a product’s

designation of origin, if a Member State takes measures to prevent unfair practices in this connection,

it is however subject to the condition that these measures should be reasonable and that the means

of proof required should not act as a hindrance to trade between Member States and should, in

consequence, be accessible to all community nationals.

7. Even without having to examine whether or not such measures are covered by Article [34 TFEU],

they must not, in any case, by virtue of the principle expressed in the second sentence of that article,

constitute a means of arbitrary discrimination or a disguised restriction on trade between Member

States.

8. That may be the case with formalities, required by a Member State for the purpose of proving the

origin of a product, which only direct importers are really in a position to satisfy without facing serious

diffi culties.

9. Consequently, the requirement by a Member State of a certifi cate of authenticity which is less easily

obtainable by importers of an authentic product which has been put into free circulation in a regular

manner in another Member State than by importers of the same product coming directly from the

country of origin constitutes a measure having an effect equivalent to a quantitative restriction as

prohibited by the Treaty.

8 See e.g. Case C-88/07 Commission v Spain , Judgment of 5 March 2009; Case C-319/05 Commission v Germany [2007] ECR I-9811; Joined Cases C-158/04 and C-159/04 Alfa Vita v Elliniko Dimosio and Nomarchiaki Aftodioikisi Ioanninon [2006] ECR I-8135; Case C-383/97 Van der Laan [1999] ECR I-731.

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well-entrenched, while national judges were still often unfamiliar with EU law. Thirdly, one may note the emphasis in paragraphs 7 to 9 on discrimination. There is no mention of this in the paragraph 5 defi nition, and yet the Belgian rule is fi nally ruled incompatible not because it makes all imports diffi cult, but because it makes imports from France harder than those from the United Kingdom (paragraph 9). The traditional view of free trade agreements, and of Article 34, that they are fundamentally about equal treatment of goods from different states, 9 is clearly infl uential here.

(ii) Limits of the notion of an MEQR

The situations to which Dassonville has been applied are diverse. Examples include government campaigns encouraging consumers to purchase domestic goods, 10 rules requiring electricity suppliers to purchase a percentage of their electricity from domestic wind farms, 11 obligations on petrol importers to maintain a reserve store, 12 requirements to obtain a licence to import certain goods, 13 even where the licence is a formality granted as of right, 14 public tenders re-quiring goods made according to national standards 15 and procedures whereby alcoholic drinks could only be imported via certain state-controlled channels. 16 The most important common factor which these measures share is simply that in practice they hinder imports, or are likely to do so. 17 Dassonville is usually applied in a very pragmatic and non-theoretical way.

An additional factor linking most measures which the Court has found to be MEQRs is that they have some unequal effect: either they discriminate against imported products directly, or they create some specifi c hindrance to cross-border trade which they do not create for internal trade. 18 Even measures which seem at fi rst glance to have equal effects often turn out to have some specifi cally import-restricting effect upon closer examination. In Commission v Austria , an Austrian rule prohibiting heavy goods traffi c from an alpine motorway, on environmental grounds, was found to contravene Article 34. 19 The rule applied without reference to national-ity, but the Commission argued, without being contradicted, that most of the heavy trucks on that road were in fact transiting Austria, and were likely to be foreign or to be carrying foreign goods, while local freight traffi c tended to use smaller vehicles.

Thus, although the defi nition in Dassonville does not make protectionism or discrimination part of the defi nition of an MEQR, in practice the Court has seemed reluctant to extend Article 34 to measures which have no specifi c cross-border impact, but just reduce trade or economic activity generally. However, several very recent cases call this into question, and suggest that

9 See G. de Búrca , ‘ Unpacking the Concept of Discrimination in EC and International Trade Law ’ in C. Barnard and J. Scott (eds.), The Law of the European Single Market ( Oxford , Hart , 2002 ) 181 .

10 Case 249/81 Commission v Ireland [1982] ECR 4005; Case 207/83 Commission v United Kingdom (marks of origin) [1985] ECR 1201.

11 Case C-379/98 PreussenElektra [2001] ECR I-2099. 12 Case C-398/98 Commission v Greece [2001] ECR I-7915. 13 Case C-54/05 Commission v Finland [2007] ECR I-2473. 14 Case C-434/04 Ahokkainen [2006] ECR I-9171. 15 Case 45/87 Commission v Ireland [1988] ECR 4929. 16 Case C-170/04 Klas Rosengren and Others v Riksåklagaren [2007] ECR I-4071. 17 Tax measures are generally excluded from Article 34; see Case C-383/01 De Danske Bilimportører [2003] ECR

I-6065; Case 47/88 Commission v Denmark [1990] ECR 4509. 18 See G. Davies , Nationality Discrimination in the European Internal Market ( The Hague , Kluwer Law International ,

2003 ) . 19 Case C-320/03 Commission v Austria [2005] ECR I-9871.

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the Court may be letting go of this implicit limit, applying Article 34 whenever access to a market is hindered.

One group of cases have involved rules concerning the use of goods. In Mickelsson and Roos , the Finnish government prohibited the use of jet-skis except on designated waterways, and then did not designate any waterways, so that in practice jet-skis could not be used in Finland. 20 In Commission v Portugal , a Portuguese measure was successfully challenged which prohibited sticking tinted plastic to car windows to turn them into tinted windows. 21 Then in Commission v Italy , a challenge was brought to Italian rules which prohibited the towing of a trailer behind a motorcycle. 22

In these three cases there was no outright prohibition on the importation or sale of a product, but a measure which indirectly achieved more or less the same effect. If something cannot be used (jet-skis, tinted window stickers or motorcycle trailers), then in practice trying to import and sell that product will be a hopeless venture. It will not be illegal, but no one will want to buy it.

20 Case C-142/05 Åklagaren v Mickelsson and Roos , Judgment of 4 June 2009. 21 Case C-265/06 Commission v Portugal [2008] ECR I-2245. 22 Case C-110/05 Commission v Italy , Judgment of 10 February 2009.

Case C-110/05 Commission v Italy , Judgment of 10 February 2009

33. It should be recalled that, according to settled case-law, all trading rules enacted by Member States

which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are

to be considered as measures having an effect equivalent to quantitative restrictions and are, on that

basis, prohibited by Article [34 TFEU].

34. It is also apparent from settled case-law that Article [34 TFEU] refl ects the obligation to respect the

principles of non-discrimination and of mutual recognition of products lawfully manufactured and

marketed in other Member States, as well as the principle of ensuring free access of Community

products to national markets . . . .

55. In its reply to the Court’s written question, the Commission claimed, without being contradicted by the

Italian Republic, that, in the case of trailers specially designed for motorcycles, the possibilities for their

use other than with motorcycles are very limited. It considers that, although it is not inconceivable that

they could, in certain circumstances, be towed by other vehicles, in particular, by automobiles, such use

is inappropriate and remains at least insignifi cant, if not hypothetical.

56. It should be noted in that regard that a prohibition on the use of a product in the territory of a Member

State has a considerable infl uence on the behaviour of consumers, which, in its turn, affects the access

of that product to the market of that Member State.

57. Consumers, knowing that they are not permitted to use their motorcycle with a trailer specially

designed for it, have practically no interest in buying such a trailer. Thus, Article 56 of the Highway

Code prevents a demand from existing in the market at issue for such trailers and therefore hinders

their importation.

58. It follows that the prohibition laid down in Article 56 of the Highway Code, to the extent that its effect

is to hinder access to the Italian market for trailers which are specially designed for motorcycles and

are lawfully produced and marketed in Member States other than the Italian Republic, constitutes a

measure having equivalent effect to quantitative restrictions on imports within the meaning of Article

[34 TFEU], unless it can be justifi ed objectively.

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It is possible to argue that rules on use do have an unequal effect. In practice, domestic producers are unlikely to manufacture goods which cannot be used in their state. They will be conditioned by their local legal environment. Thus, the producers whose goods are affected by the use ban will almost always be foreign: it will be the producer in state X, who makes some-thing that the people of X enjoy using, and who wants to try and convert the people of state Y, but discovers that the rules of Y prevent him from doing so. This argument is particularly relevant because all the cases concerned an effective ban on the use of a product, not simply a restriction. It remains to be seen whether, for example, a restriction on the use of cars to those who possess a licence, which also limits sales of cars and therefore of imports, would be found to be an MEQR, and it is suggested that this is unlikely.

However, it is notable that in the extract above the Court fi nds that Article 34 requires equal treatment and market access, as if the latter is more than an interpretation of the former, but an extension of it. Whether or not the measure in fact has an unequal effect, there is no sugges-tion in the judgment that the Court considers this relevant. The Court’s reasoning is simply that because these measures effectively prevent sale of the goods, they effectively prevent imports, and are therefore MEQRs.

Alfa Vita goes a step further, applying Article 34 to a measure which did not prevent sales, but merely diminished them. This case concerned Greek regulation of the operation of bakeries. 23 Greek law required all bakeries to have an operating licence, which was granted only if they complied with a number of physical requirements, such as having an area for kneading bread and a fl our store. A number of supermarkets were prosecuted because they had bakery sections, but did not comply with these norms. Their defence was that they did not in fact make their own bread products, but bought frozen dough, or frozen part-cooked bread, which then simply had to be placed in the ovens for a while to complete its baking process. Thus, the bakery requirements were completely inappropriate to their activities, and imposed an unreasonable cost on their business. The sale of ‘bake-off’ bread products was burdened and therefore inhibited.

The Court agreed entirely, fi nding the rules to be an MEQR. They inhibited the sale of a product which might be imported. However, it did not address the question whether these bakery requirements had any import-specifi c effect, and there was no discussion of whether the ‘bake-off’ products were in fact imported or not. It is possible to argue that bread baked on the premises is inevitably a local product, whereas frozen bake-off products may be domesti-cally produced but may equally be imported. Thus rules which favour the former at the expense of the latter will tend to support local products and discourage possible imports. However, the Court did not emphasise this possible inequality. By contrast, its reasoning was merely that by imposing an unreasonable cost on the sale of a product, the rules would inhibit or diminish its sale and therefore also its import.

The judgments in the usage cases and Alfa Vita therefore suggest that it is not necessary to show unequal effect to engage Article 34, although the fact that the rules in these cases prob-ably did hit imports particularly hard must temper this conclusion somewhat. Moreover, while the usage cases concern measures which effectively prevent sales entirely, Alfa Vita concerns a measure which merely inhibited sales by imposing a cost burden. If the fact that a measure

23 Case C-188/04 Alfa Vita v Elliniko Dimosio and Nomarchiaki Aftodioikisi Ioanninon [2006] ECR I-8135.

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has a potential sales-reducing effect is enough to make it an MEQR, then Article 34 is indeed broad. It may also be noted that Alfa Vita is in tension with another pillar of the case law, Keck , a matter discussed further below. 24

It remains to be seen where the Court will go. The extension of Article 34 to any measure reducing sales, even without unequal effect, would enable its application to a huge range of measures, and potentially raise constitutional problems. 25 It would require some new limit, for example a condition that a measure have a suffi ciently ‘direct’ effect, or that its impact on sales be ‘signifi cant’ or ‘substantial’. 26 As yet the Court has not developed such concepts, and they are suffi ciently vague that they might present problems of justiciability. 27 There are there-fore good reasons to be sceptical that a true ‘market access’ approach to Article 34 will ever be implemented, or should be. However, Commission v Italy was a Grand Chamber judgment, and it is hard to believe that the way the judgment was phrased was not a deliberate choice, so perhaps a message is being sent that Article 34 is about to undergo another expansionary phase.

(iii) Form of an MEQR

The form of an MEQR has never been something of great signifi cance. The Court looks at the effects, and does not limit Article 34 to any particular legal type of measure. National laws and regulations may be caught, but so may administrative practices without a formal legal basis. 28 Most notably, in the recent AGM case, the Court found a mere pronouncement by a public offi cial to comprise an MEQR. 29 AGM, an Italian company, exported lifting machines to Finland. There was some doubt in Finland as to whether they complied with the safety require-ments of Finnish law and of the relevant European standards. After negotiations with AGM, which agreed to make some alterations to the machines, the Finnish government decided that no further action was necessary. However, there were clearly differences of opinion within the safety authorities, because the safety offi cial who had initially investigated the machines, Mr Lehtinen, went on television in an interview and declared that the machines were danger-ous, and did not comply with the relevant Directive. A storm of media interest followed, with newspaper reports about ‘treacherous vehicle lifts’, concern from the Finnish metalworkers union, and so on. Inevitably, sales of AGM machines were badly affected.

The Court was asked to consider whether Mr Lehtinen’s statements could be an MEQR. It took into account the fact that he had initially been authorised by his superiors to appear in the interview, but that he was later removed from the case and disciplined for making public

24 See p. 775. 25 See J. Snell , Free Movement of Goods and Services in EC Law ( Oxford , Oxford University Press , 2002 ) ; G. Davies ,

‘ Discrimination is Better than Market Access ’ in Nationality Discrimination in the European Internal Market ( The Hague , Kluwer Law International , 2003 ) 93 .

26 See S. Weatherill , ‘ After Keck : Some Thoughts on How to Clarify the Clarifi cation ’ ( 1996 ) 33 CMLRev . 885 ; C. Barnard , ‘ Fitting the Remaining Pieces into the Goods and Persons Jigsaw ’ ( 2001 ) 26 ELRev . 35 ; A. Tryfonidou , ‘ Was Keck a Half-baked Solution After All? ’ ( 2007 ) 34 LIEI 167 .

27 See Davies, above n. 25. 28 Case 21/84 Commission v France [1985] ECR 1355; Case C-192/01 Commission v Denmark [2003] ECR I-9693;

Case C-212/03 Commission v France [2005] ECR I-4213. 29 Case C-470/03 AGM-COS.MET Srl v Suomen valtio and Tarmo Lehtinen [2007] ECR I-2749; see N. Reich , ‘ AGM-

COS.MET or Who is Protected by EC Safety Regulation? ’ ( 2008 ) 31 ELRev . 85 ; S. De Vries , ‘ Annotation of AGM ’ ( 2008 ) 45 CMLRev . 569 .

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statements which did not conform to the offi cial position. The extent to which his statements should therefore be attributed to the state was therefore arguable.

The discussion in the case took place in the context of article 4(1) of the relevant har-monisation Directive. That article provided that machinery complying with the Directive should benefi t from free movement. It essentially translates Article 34 TFEU to this particular context.

AGM-COS.MET Srl v Suomen Valtio and Tarmo Lehtinen [2007] ECR I-2749

55 . . . the referring court’s fi rst question should be reformulated so that the court essentially asks

whether it is possible to classify the opinions expressed publicly by Mr Lehtinen as obstacles to the

free movement of goods for the purposes of Article 4(1) of the Directive, attributable to the Finnish

State.

56. Whether the statements of an offi cial are attributable to the State depends in particular on how those

statements may have been perceived by the persons to whom they were addressed.

57. The decisive factor for attributing the statements of an offi cial to the State is whether the persons

to whom the statements are addressed can reasonably suppose, in the given context, that they are

positions taken by the offi cial with the authority of his offi ce.

58. In this respect, it is for the national court to assess in particular whether:

– the offi cial has authority generally within the sector in question;

– the offi cial sends out his statements in writing under the offi cial letterhead of the competent

department;

– the offi cial gives television interviews on his department’s premises;

– the offi cial does not indicate that his statements are personal or that they differ from the offi cial

position of the competent department; and

– the competent State departments do not take the necessary steps as soon as possible to dispel the

impression on the part of the persons to whom the offi cial’s statements are addressed that they are

offi cial positions taken by the State.

59. It remains to examine whether the statements at issue in the main proceedings, on the assumption that

they are attributable to the Finnish State, infringe Article 4(1) of the Directive.

60. Any measure capable of hindering, directly or indirectly, actually or potentially, intra-Community trade

is to be considered as an obstacle. That principle applies also where the interpretation of Article 4(1) of

the Directive is concerned . . . .

65. Since the statements at issue described the vehicle lifts, in various media and in widely circulated

reports, as contrary to standard EN 1493:1998 and dangerous, they are capable of hindering, at least

indirectly and potentially, the placing on the market of the machinery.

66. In the light of the above considerations, the answer to Question 1 must be that statements which, by

reason of their form and circumstances, give the persons to whom they are addressed the impression that

they are offi cial positions taken by the State, not personal opinions of the offi cial, are attributable to the

State. The decisive factor for the statements of an offi cial to be attributed to the State is whether the

persons to whom those statements are addressed can reasonably suppose, in the given context, that they

are positions taken by the offi cial with the authority of his offi ce. To the extent that they are attributable

to the State, statements by an offi cial describing machinery certifi ed as conforming to the Directive as

contrary to the relevant harmonised standard and dangerous thus constitute a breach of Article 4(1) of

the Directive.

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It is long established that if the state were to campaign in favour of national products, using ap-peals to patriotism or chauvinism, or criticising foreign products, this would contravene Article 34. 30 It seems, following AGM , that the same principles apply to statements by individual offi cials where these are reasonably attributed to the state by their addressees, something which will encourage offi cial organs to keep an even stricter rein on their functionaries. The Court went on to fi nd that the normal principles of state liability applied, so that it was open to the national court to fi nd the state liable to compensate AGM. EU law also permitted, but did not require, that offi cials such as Mr Lehtinen attract personal liability for behaviour amounting to an MEQR.

Cases such as AGM beg the question whether Article 34 has a de minimis threshold. Not every comment by a civil servant causes as much excitement as Mr Lehtinen’s did. One can imagine discriminatory statements or acts by individuals or authorities that are wrongful in principle, but simply too insignifi cant to merit much concern. Does Article 34 apply?

(iv) De minimis

The Court’s formal position has always been that there is no de minimis for the application of Article 34.

Thus, if a measure is an MEQR within the Dassonville defi nition, it is not important that its effect is in fact very small.

However, a quasi- de minimis rule is introduced by the doctrine, consistently present in the case law on goods and on the other freedoms, that measures whose effect is too ‘uncertain and indirect’ will not be caught by the Treaty.

Joined Cases 177/82 and 178/82 Van de Haar [1984] ECR 1797

13. It must be emphasized in that connection that Article [34 TFEU] does not distinguish between measures

having an effect equivalent to quantitative restrictions according to the degree to which trade between

Member States is affected. If a national measure is capable of hindering imports it must be regarded as

a measure having an effect equivalent to a quantitative restriction, even though the hindrance is slight

and even though it is possible for imported products to be marketed in other ways.

Case C-379/92 Peralta [1994] ECR I-3453

23. The national court enquires about the compatibility of the Italian legislation with Article [34 TFEU]

insofar as it requires Italian vessels to carry costly equipment. It asks itself whether this makes imports of

chemical products into Italy more expensive and therefore creates an obstacle prohibited by that article.

24. On this point, it is suffi cient to observe that legislation like the legislation in question makes no

distinction according to the origin of the substances transported, its purpose is not to regulate trade in

goods with other Member States and the restrictive effects which it might have on the free movement

of goods are too uncertain and indirect for the obligation which it lays down to be regarded as being of

a nature to hinder trade between Member States.

30 Case 249/81 Commission v Ireland [1982] ECR 4005; Case 207/83 Commission v United Kingdom (marks of origin) [1985] ECR 1201.

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This is potentially important in the light of the recent market access cases discussed above. In the event that Article 34 is increasingly applied in the future on the basis that a measure has the effect of reducing sales, the rule in Peralta could provide a useful counter-balance, preventing every tax rise or change to public transport becoming subject to Article 34.

(v) The internal situation

Article 34 TFEU only applies to measures hindering imports. If a measure does not apply to imports but only to domestic producers, then in general it will be outside Article 34. 31 Thus, in Dassonville , the Court found that applying the origin-certifi cates rule to imports was contrary to Article 34, but if the Belgian state had continued to apply that rule only to Belgian drinks brewed in Belgium and bearing origin marks from Belgian towns or re-gions, this would have been of no interest to EU law. It is true that this approach can lead to reverse discrimination, whereby EU law tolerates a situation in which domestic produc-ers are more heavily burdened by law than importers. However, the Court is unconcerned by this: ‘As regards the general principle of non-discrimination, it must be observed that community law does not apply to treatment which works to the detriment of national prod-ucts as compared with imported products or to the detriment of retailers who sell national products.’ 32

In some, relatively unusual, circumstances even though a measure does not apply to imports it may nevertheless create a problem or disadvantage for them and so comprise an MEQR. Pistre concerned French law on product designations, and the particular designa-tion ‘mountain ham’. 33 Apparently ham from pigs who have lived in the mountains is often particularly good, and so in marketing such ham, specifi c reference is made to its high altitude origin. To protect the consumer, French law regulated the use of such references. Ham could only be called ‘mountain ham’ if its production complied with a number of rules. However, in practice it was only possible to comply with these rules if the ham was French. They were so formulated that ham even from very high places in other countries would not comply.

Realising that this amounted to discrimination against imported goods, the French gov-ernment chose not to apply the rules to imports. It was therefore possible to sell Spanish or Scottish ham in France which bore the word ‘mountain’ on the package, or reference to a specifi c mountain area, without legal problems. In the case, therefore, it was not an im-porter, but a French producer who complained. He was being prosecuted for selling French ham bearing the word ‘mountain’ without complying with the rules associated with that name. In his defence he challenged the legality of the French rules. The French government claimed that since these rules did not apply to imports, Article 34 was not relevant. The Court disagreed.

31 Case C-98/86 Mathot [1987] ECR 809. 32 Case 355/85 Driancourt v Cognet [1986] ECR 3231, para. 11. 33 Case C-321/94 Pistre [1997] ECR I-2343.

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The Court found that the measure contravened Article 34 even though it only applied to domestic products — in fact precisely because it only applied to domestic products. By having a designation with which only domestic ham could comply, French law provided a marketing advantage to national ham over foreign ham. The mere creation of a distinction between na-tional and foreign products may itself amount to a barrier to imports. 34 This was the case even though the importer was in fact subject to fewer requirements than the domestic producers, and thus at fi rst glance was advantaged rather than disadvantaged.

EU law often also applies indirectly to internal situations, via national law. Sometimes na-tional law prohibits reverse discrimination, meaning that a court faced with internal facts, as in Pistre , is required by national law to treat the litigant in the same way as they would were she an importer. This means that the court needs to know what EU law would say in the hy-pothetical situation that the measure is applied to imports. The Court answers such questions, because the answer is necessary for the national judge if she is to reach her decision. However, the actual situation in question, being internal, is not within the scope of EU law. 35

A variation on the internal situation is the U-turn, whereby goods are exported and then reimported. This may simply be the result of several sales, from party to party. Sometimes goods are traded quite extensively before reaching the fi nal consumer. However, it may be a deliberate construction, aimed at bringing the goods within Article 34 so that they can benefi t from EU law and be exempted from burdensome national rules. In Au Blé Vert , the Court de-cided that reimports must be treated as imports, unless it could be shown that the goods were exported for the sole purpose of reimportation, in order to circumvent national legislation. This is doctrinally quite straightforward, but raises very diffi cult questions of evidence. 36 Where goods are sold to a trader abroad, and then resold to a new domestic trader, it is a considerable challenge to demonstrate that these were working together. 37

Case C-321/94 Pistre [1997] ECR I-2343

43. According to settled case-law, the prohibition laid down in Article [34 TFEU] covers all trading rules

enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially,

intra-Community trade.

44. Accordingly, whilst the application of a national measure having no actual link to the importation

of goods does not fall within the ambit of Article [34 TFEU], Article [34 TFEU] cannot be considered

inapplicable simply because all the facts of the specifi c case before the national court are confi ned to a

single Member State.

45. In such a situation, the application of the national measure may also have effects on the free movement

of goods between Member States, in particular when the measure in question facilitates the marketing of

goods of domestic origin to the detriment of imported goods. In such circumstances, the application

of the measure, even if restricted to domestic producers, in itself creates and maintains a difference of

treatment between those two categories of goods, hindering, at least potentially, intra-Community trade.

34 See G. Davies , ‘ Consumer Protection as an Obstacle to the Free Movement of Goods ’ ( 2007 ) 4 ERA-Forum 55 . 35 Case C-448/98 Guimont [2000] ECR I-10663; see C. Ritter , ‘ Purely Internal Situations, Reverse Discrimination,

Guimont , Dzodzi and Article 234 ’ ( 2006 ) 31 ELRev . 690 . 36 Case 229/83 Association des Centres Distributeurs Leclerc v SARL ‘Au Blé Vert’ [1985] ECR 1. 37 Case C-322/01 Deutscher Apothekerverband v DocMorris [2003] ECR I-14887.

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(vi) Article 34 TFEU and private actors

The Court has consistently held that Article 34 only applies to measures taken by public bodies: ‘Articles [34 and 35 TFEU] concern only public measures and not the conduct of undertak-ings.’ 38 This is in contrast with the law on free movement of workers and services, which in many cases also applies to private actors. 39 However, if companies or individuals act in a way that excludes foreign products, the Court sees this as a matter for competition law. 40

This principled limit to Article 34 is mitigated somewhat by a broad conception of the public. For Article 34 to apply, a body does not have to be formally a part of the government. It is suffi cient that it is carrying out a public duty on behalf of the state, or that it is controlled by the state. In Apple and Pear Development Council , a body representing fruit growers ran a ‘buy English apples and pears’ campaign. The council was not a public body, but it enjoyed public law privileges, such as the power to levy fruit growers.

Case 222/82 Apple and Pear Development Council [1983] ECR 4083

17. As the Court held in its judgment of 24 November 1982 in Case 249/81 Commission v Ireland ,

a publicity campaign to promote the sale and purchase of domestic products may, in certain

circumstances, fall within the prohibition contained in Article [34 TFEU] . . . , if the campaign is

supported by the public authorities . . . [I]n fact, a body such as the development council, which is set up

by the government of a Member State and is fi nanced by a charge imposed on growers, cannot under

Community law enjoy the same freedom as regards the methods of advertising used as that enjoyed by

producers themselves or producers’ associations of a voluntary character.

The Court refers here to the Buy Irish case, in which the Irish government set up a marketing organisation to promote Irish goods. 41 This was clearly discrimination against foreign goods, but was it attributable to the Irish state? They argued that the body was incorporated as an independent company, acting on behalf of Irish producers, for whose actions the state could not be held accountable.

Case 249/81 Commission v Ireland [1982] ECR 4005

23. The fi rst observation to be made is that the campaign cannot be likened to advertising by private or

public undertakings . . . , or by a group of undertakings, to encourage people to buy goods produced by

those undertakings. Regardless of the means used to implement it, the campaign is a refl ection of the

Irish government’s considered intention to substitute domestic products for imported products on the

Irish market and thereby to check the fl ow of imports from other Member States.

38 Case 311/85 Vereniging van Vlaamse Reisbureaus v ASBL Sociale Dienst van de Plaatselijke en Gewestelijke Overheidsdiensten [1987] ECR 3801.

39 See Chapters 19 and 20 ; E. Lohse , ‘ Fundamental Freedoms and Private Actors ’ ( 2007 ) 13 EPL 159 ; S. Van den Bogaert , ‘ Horizontality ’ in C. Barnard and J. Scott (eds.), The Law of the European Single Market ( Oxford , Hart , 2002 ) 123 .

40 See generally on the competition/free movement boundary W. Sauter and H. Schepel , State and Market in EU Law ( Cambridge , Cambridge University Press , 2008 ) ch. 4; K. Mortelmans , ‘ Towards Convergence in the Application of the Rules on Free Movement and on Competition ’ ( 2001 ) 38 CMLRev . 613 .

41 Case 249/81 Commission v Ireland [1982] ECR 4005.

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It is clear that the link between state and organisation does not need to be legally watertight, as long as it is demonstrably real. In this case it was the Irish state that was the object of the Commission’s enforcement action, but given the way the Court in Apples and Pears draws a parallel between that case and the Buy Irish case, it seems likely that it would have been pos-sible to apply Article 34 directly to the Buy Irish organisation itself. This is what happened in the German Quality Products case. 42 German producers complying with various quality rules were able to apply for the right to affi x a mark to their goods, ‘German Quality Product’. This was clearly not available to foreign goods, and so amounted to a discriminatory marketing scheme. It was found to violate Article 34 even though the scheme was operated by a non-governmental body, because that body was a product of statute, and so was essentially acting on behalf of and under the auspices of the state.

A more diffi cult situation is where the state does not actively support market-closing mea-sures, but simply refrains from taking action against them. This fi rst occurred in Commission v France , in which the Court found that France had violated a combination of Articles 34 and 4(3) TEU (the duty of loyalty) by failing to remove French farmers who were blocking bor-der crossings to prevent imported agricultural goods from reaching the French market. 43 The leading case, however, is now Schmidberger , in which the relevant principles have been most clearly developed. In Schmidberger , a group of Austrian demonstrators blocked motorways coming into Austria from Italy, as a protest against the pollution caused by transit traffi c in Alpine valleys. This clearly restricted the import of goods by blocking freight traffi c, and the Austrian government therefore had an obligation as in Commission v France to clear the roads. However, this obligation had to be balanced against the fundamental right to associa-tion, which the protesters claimed would be violated by an unmitigated application of Article 34. The question, ultimately, was whether the Austrian government had behaved in a propor-tionate and reasonable way in the light of the balance which needed to be struck. The Court found that it had, and provided a very clear framework for the balancing of free movement and fundamental rights.

Case C-112/00 Schmidberger v Republic of Austria [2003] ECR I-5659

57. In this way the Court held in particular that, as an indispensable instrument for the realisation of a

market without internal frontiers, Article [34 TFEU] does not prohibit only measures emanating from the

State which, in themselves, create restrictions on trade between Member States. It also applies where a

Member State abstains from adopting the measures required in order to deal with obstacles to the free

movement of goods which are not caused by the State.

58. The fact that a Member State abstains from taking action or, as the case may be, fails to adopt

adequate measures to prevent obstacles to the free movement of goods that are created, in particular,

by actions by private individuals on its territory aimed at products originating in other Member States is

just as likely to obstruct intra-Community trade as is a positive act.

59. Consequently, Articles [34 and 35 TFEU] require the Member States not merely themselves to refrain

from adopting measures or engaging in conduct liable to constitute an obstacle to trade but also,

42 Case C-325/00 Commission v Germany (CMA) [2002] ECR I-9977. 43 Case C-265/95 Commission v France (Spanish strawberries) [1997] ECR I-6959.

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when read with Article [4(3) TEU], to take all necessary and appropriate measures to ensure that that

fundamental freedom is respected on their territory. Article [4(3) TEU] requires the Member States to

take all appropriate measures, whether general or particular, to ensure fulfi lment of the obligations

arising out of the Treaty and to refrain from any measures which could jeopardise the attainment of the

objectives of that Treaty.

60. Having regard to the fundamental role assigned to the free movement of goods in the Community

system, in particular for the proper functioning of the internal market, that obligation upon each

Member State to ensure the free movement of products in its territory by taking the measures necessary

and appropriate for the purposes of preventing any restriction due to the acts of individuals applies

without the need to distinguish between cases where such acts affect the fl ow of imports or exports

and those affecting merely the transit of goods.

69. It is apparent from the fi le in the main case that the Austrian authorities were inspired by

considerations linked to respect of the fundamental rights of the demonstrators to freedom of

expression and freedom of assembly, which are enshrined in and guaranteed by the ECHR and the

Austrian Constitution….

77. The case thus raises the question of the need to reconcile the requirements of the protection of

fundamental rights in the Community with those arising from a fundamental freedom enshrined in

the Treaty and, more particularly, the question of the respective scope of freedom of expression and

freedom of assembly, guaranteed by Articles 10 and 11 of the ECHR, and of the free movement of

goods, where the former are relied upon as justifi cation for a restriction of the latter.

78. First, whilst the free movement of goods constitutes one of the fundamental principles in the scheme

of the Treaty, it may, in certain circumstances, be subject to restrictions for the reasons laid down in

Article [36 TFEU] or for overriding requirements relating to the public interest, in accordance with the

Court’s consistent case-law since the judgment in Case 120/78 Rewe-Zentral (‘ Cassis de Dijon ’) [1979]

ECR 649.

79. Second, whilst the fundamental rights at issue in the main proceedings are expressly recognised by the

ECHR and constitute the fundamental pillars of a democratic society, it nevertheless follows from the

express wording of paragraph 2 of Articles 10 and 11 of the Convention that freedom of expression and

freedom of assembly are also subject to certain limitations justifi ed by objectives in the public interest,

insofar as those derogations are in accordance with the law, motivated by one or more of the legitimate

aims under those provisions and necessary in a democratic society, that is to say justifi ed by a pressing

social need and, in particular, proportionate to the legitimate aim pursued.

80. Thus, unlike other fundamental rights enshrined in that Convention, such as the right to life or

the prohibition of torture and inhuman or degrading treatment or punishment, which admit of no

restriction, neither the freedom of expression nor the freedom of assembly guaranteed by the ECHR

appears to be absolute but must be viewed in relation to its social purpose. Consequently, the exercise

of those rights may be restricted, provided that the restrictions in fact correspond to objectives of

general interest and do not, taking account of the aim of the restrictions, constitute disproportionate

and unacceptable interference, impairing the very substance of the rights guaranteed.

81. In those circumstances, the interests involved must be weighed having regard to all the circumstances

of the case in order to determine whether a fair balance was struck between those interests.

82. The competent authorities enjoy a wide margin of discretion in that regard. Nevertheless, it is necessary

to determine whether the restrictions placed upon intra-Community trade are proportionate in the

light of the legitimate objective pursued, namely, in the present case, the protection of fundamental

rights.

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The Court went on to fi nd that the Austrian authorities had not violated Article 34. Their actions refl ected a justifi ed and proportionate approach to balancing free movement of goods and the right to demonstrate. The factors which infl uenced the Court in particular were that this was a lawful and peaceful demonstration, approved in advance, for a limited period of time (around thirty hours), and for the purpose of demonstrating a legitimate concern — the protection of the environment. Moreover, the authorities could show that they had considered whether limiting the place and time of the demonstration so that the effect on goods traffi c was reduced was a realistic alternative, but had for reasonable grounds come to the conclusion that these would deprive the demonstration of its very purpose and so be an excessive restric-tion on the right to demonstrate. Finally, once the demonstration was approved the authorities tried to minimise disruption by diverting traffi c to other possible routes. In short, the Austrian authorities were a model of good governance, balancing interests in a carefully reasoned way. Schmidberger can be contrasted with Commission v France , in which the demonstration was explicitly aimed at preventing imports as such yet the French authorities tolerated border clo-sure for an extended and open-ended period, showed little concern about occasional violence by those involved, allowed a climate of fear and hostility to trade to develop and expressed complete passivity over the consequences.

Schmidberger has been criticised because the Court appears to put the ‘fundamental freedom’ embodied in Article 34, which is essentially about trade, on an equal level with the funda-mental rights to free association and expression. 44 Despite the actual result, it has been argued that the case opens the door to a degradation of the status of fundamental rights. However, as the Court noted, the rights to free expression and assembly are not absolute, and neither is Article 34, so it is hard to see what the Court could have done other than look for an appropri-ate balance. However, whether the Court always takes such a rights-friendly stance needs to be considered in the light of recent cases in the fi eld of services, Laval and Viking , discussed in Chapter 19 . 45

3 PRODUCT STANDARDS AND CASSIS DE DIJON

Germany, like a number of EU Member States, traditionally regulates products strictly, lead-ing to a marketplace with a limited range of goods but high quality. This creates problems for importers located in less demanding states. Their goods, made according to different, or laxer, standards do not comply with local rules in many other states and so cannot gain access to the markets of these states. In the early days of European integration this was not seen as unfair. A ‘when in Rome’ approach was taken. 46 If importers wished to sell in state X they should comply with its rules. Dassonville was not generally considered to prohibit product standards if these were equally applicable to domestic and to foreign products.

However, this approach brings with it a number of problems. First, it requires producers to make their products according to a number of different standards, depending upon where

44 J. Morijn , ‘ Balancing Fundamental Rights and Common Market Freedoms in Union Law ’ ( 2006 ) 12 ELJ 15 . 45 See N. Nic Shuibhne , ‘ Margins of Appreciation: National Values, Fundamental Rights and EC Free Movement

Law ’ ( 2009 ) 34 ELRev . 230 ; C. Kombas , ‘ Fundamental Rights and Fundamental Freedoms: A Symbiosis on the Basis of Subsidiarity ’ ( 2006 ) 12 EPL 433 .

46 The use of the phrase in this context is borrowed from K. Nicolaidis and G. Shaffer , ‘ Managed Mutual Recognition Regimes: Governance Without Global Government ’ ( 2005 ) 68 Law and Contemporary Problems 263 .

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they wish to export to. The idea that the internal market will enable consolidation of industry and economies of scale is undermined if factories have to run numerous separate production lines for different markets. Moreover, in practice, producers will not always do this, so that the realisation of an undivided European market will be impeded. Markets will remain local, as producers decide that it is too diffi cult or expensive to rework their goods to comply with local rules. The markets in smaller states will be particularly isolated, as potential profi ts are less and may not justify adapting production.

Traditionally such issues were to be dealt with by harmonisation. However, this did not turn out to be the easy and effective market-building tool that some had hoped, as product development and national regulation outpaced the capacity of the European institutions to harmonise. 47 It was in this context, and during a period of European political stagnation, that the Court intervened with its judgment in Cassis de Dijon .

German law required fruit liqueurs to possess at least 25 per cent alcohol. Cassis de Dijon, a blackcurrant liqueur, was made in France and typically contained between 15 and 20 per cent alcohol. As a result it could not be sold in Germany. A German importer, refused authorisation to import and sell Cassis , challenged this decision on the basis that it contravened Article 34.

Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein

(Cassis de Dijon) [1979] ECR 649

8. In the absence of common rules relating to the production and marketing of alcohol . . . it is for the

Member States to regulate all matters relating to the production and marketing of alcohol and alcoholic

beverages on their own territory.

Obstacles to movement within the community resulting from disparities between the national laws

relating to the marketing of the products in question must be accepted insofar as those provisions

may be recognized as being necessary in order to satisfy mandatory requirements relating in particular

to the effectiveness of fi scal supervision, the protection of public health, the fairness of commercial

transactions and the defence of the consumer.

9. The government of the Federal Republic of Germany, intervening in the proceedings, put forward various

arguments which, in its view, justify the application of provisions relating to the minimum alcohol

content of alcoholic beverages, adducing considerations relating on the one hand to the protection of

public health and on the other to the protection of the consumer against unfair commercial practices.

10. As regards the protection of public health the German government states that the purpose of the

fi xing of minimum alcohol contents by national legislation is to avoid the proliferation of alcoholic

beverages on the national market, in particular alcoholic beverages with a low alcohol content, since, in

its view, such products may more easily induce a tolerance towards alcohol than more highly alcoholic

beverages.

11. Such considerations are not decisive since the consumer can obtain on the market an extremely wide range

of weakly or moderately alcoholic products and furthermore a large proportion of alcoholic beverages with

a high alcohol content freely sold on the German market is generally consumed in a diluted form.

12. The German government also claims that the fi xing of a lower limit for the alcohol content of certain

liqueurs is designed to protect the consumer against unfair practices on the part of producers and

distributors of alcoholic beverages.

47 See Chapter 16 .

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The Court fi nds that the application of product standards to imports hinders their importa-tion, as is obviously correct. Therefore such rules, applied to imports, are MEQRs.

The solution, however, is not to prohibit product standards as such. This would result in an unregulated European product market, undesirable for many reasons. By contrast, the Court begins paragraph 8 by noting that since there is no EU legislation harmonising alcohol levels (there is now, there was not then), it is quite legitimate for Member States to regulate this mat-ter. It is thus not the existence of product standards as such that is the problem, but just their application to products imported from other Member States.

This argument is based on the consideration that the lowering of the alcohol content secures a

competitive advantage in relation to beverages with a higher alcohol content, since alcohol constitutes by

far the most expensive constituent of beverages by reason of the high rate of tax to which it is subject.

Furthermore, according to the German government, to allow alcoholic products into free circulation

wherever, as regards their alcohol content, they comply with the rules laid down in the country of

production would have the effect of imposing as a common standard within the community the lowest

alcohol content permitted in any of the Member States, and even of rendering any requirements in this

fi eld inoperative since a lower limit of this nature is foreign to the rules of several Member States.

13. As the Commission rightly observed, the fi xing of limits in relation to the alcohol content of beverages

may lead to the standardization of products placed on the market and of their designations, in the

interests of a greater transparency of commercial transactions and offers for sale to the public.

However, this line of argument cannot be taken so far as to regard the mandatory fi xing of minimum

alcohol contents as being an essential guarantee of the fairness of commercial transactions, since it is a

simple matter to ensure that suitable information is conveyed to the purchaser by requiring the display

of an indication of origin and of the alcohol content on the packaging of products.

14. It is clear from the foregoing that the requirements relating to the minimum alcohol content of

alcoholic beverages do not serve a purpose which is in the general interest and such as to take

precedence over the requirements of the free movement of goods, which constitutes one of the

fundamental rules of the Community.

In practice, the principal effect of requirements of this nature is to promote alcoholic beverages

having a high alcohol content by excluding from the national market products of other Member States

which do not answer that description.

It therefore appears that the unilateral requirement imposed by the rules of a Member State of a

minimum alcohol content for the purposes of the sale of alcoholic beverages constitutes an obstacle to

trade which is incompatible with the provisions of Article [34 TFEU].

There is therefore no valid reason why, provided that they have been lawfully produced and marketed

in one of the Member States, alcoholic beverages should not be introduced into any other Member

State; the sale of such products may not be subject to a legal prohibition on the marketing of beverages

with an alcohol content lower than the limit set by the national rules.

15. Consequently, the fi rst question should be answered to the effect that the concept of ‘measures having

an effect equivalent to quantitative restrictions on imports’ contained in Article [34 TFEU] is to be

understood to mean that the fi xing of a minimum alcohol content for alcoholic beverages intended for

human consumption by the legislation of a Member State also falls within the prohibition laid down in

that provision where the importation of alcoholic beverages lawfully produced and marketed in another

Member State is concerned.

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The trade-restricting effects of such application are dealt with by developing two ideas, which are the major contribution of Cassis de Dijon to EU law, and which are both among the most important legal developments since the Union’s foundation.

The fi rst of these is mutual recognition. The Court fi nds in paragraph 14 that if products comply with the laws of the Member State where they are produced, then there is no reason why they should not be sold in all other Member States. Each Member State is required to accept products made according to the laws of other Member States. What is good enough for France is good enough for Germany. The name subsequently given to this idea is ‘mutual recognition’, because Member States recognise as adequate each other’s laws and regulations, and therefore do not impose additional requirements on products complying with these. This idea is immensely powerful and has become a general principle of EU law, applied not only to the free movement of goods, but throughout the internal market. 48 It provides a conceptual basis for accepting not just foreign products, but foreign qualifi cations, tests and certifi cates, offi cial documents, and so on. 49 As a general rule, the foreign (from another Member State) must be recognised as functionally equivalent, at least in all really important respects, to the domestic.

The second idea is that of mandatory requirements. While the Court states that in principle goods from one state should be marketable in all others, it also concedes in paragraph 8 that there may sometimes be a need for derogation from this general principle. Sometimes the ap-plication of standards to imports may be necessary to protect important interests such as con-sumer protection or public health. The name given to these, ‘mandatory requirements’, sounds somewhat odd in English, but has stuck and is still used, although the phrase ‘public interest objectives’ is now also used.

It is therefore the case that an equally applicable rule which would otherwise violate Article 34 may be saved if it can be shown that it is necessary to protect some public interest objective. There is therefore a balancing process involved, in which proportionality is the central concept. Cases subsequent to Cassis are in fact a litany of judicial attempts to decide whether a given general interest is, on the facts, suffi cient to justify derogation from the mutual recognition rule. The following two sections go into more detail fi rst on the general rule, and then the ap-plication of the mandatory requirement exceptions.

(i) Mutual recognition

It seems fairly intuitive that a factory located in a certain Member State should be subject to the rules and regulations of that state. It also seems fairly intuitive that a product on the supermarket shelves in a Member State should be subject to the rules and regulation in that state. Yet, if products are required to comply with the laws of both the state of production and the state of sale this can create impossible burdens. Imagine, for example, that France had a maximum alcohol limit of 20 per cent and Germany a minimum of 25 per cent; it would be impossible to manufacture in France for sale in Germany. Even without such extreme situa-tions, the burden of complying with two sets of laws would impose cost and inconvenience on producers.

48 See Chapter 16 . 49 See Chapters 19 and 20 .

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This is, of course, an import-specifi c problem. Goods sold domestically would face no prob-lem because the state of production and state of sale would be the same. They would only have one set of laws to comply with. However, any goods traded between states would face at least two. 50 The application of product standards to imports would therefore not just make trade diffi cult, but it would often disadvantage imports relative to domestic production.

The solution is to construct a regime in which a given product (or service, the principle is generalised now) is only subject to one set of rules. If there has been harmonisation then this will provide that unique regulatory framework. However, in the absence of harmonisation the question is whether it is better to apply the rules of the state of sale or of production.

Given that product standards exist to protect the consumers of the products, and that the rel-evant consumers are in the state of sale, it might seem most logical to make these the relevant laws. On such a model, a factory located in France could gain exemption from local product regulations by declaring that it was manufacturing for export. However, this approach has great practical diffi culties. First, it fragments the production process, by requiring producers to make different goods for different markets, as discussed above. Secondly, it is hard to su-pervise. On the whole, supervision of production facilities is easier than of the marketplace. A factory is fi xed, hard to hide and easy to inspect. By contrast, if liqueurs have not been subject to any French laws or control because they were declared to be destined for the German mar-ket, then the German authorities will want to conduct very thorough controls before admitting them, creating new and signifi cant barriers to movement, and sometimes, given the openness of borders, being hard to enforce. There is a real risk that a choice for state of destination regu-lation would result in products or services actually escaping any effective supervision.

The Court in Cassis therefore made a choice for regulation by the country of origin. It is now a general rule of free movement law that products or services are primarily subject to the laws of their origin state, and should not, except where mandatory requirements apply, be subjected to further requirements based on destination state law. 51 Joerges has described Cassis de Dijon as creating a meta-norm which both parties to a free movement confl ict (France and Germany in this case) can accept, and which mediates between their different laws. 52

This approach has great legal elegance. It has been described as a principle of tolerance, akin to multiculturalism in products, because it requires Member States to accept products that are different from those they are used to domestically. 53 It embodies an idea of ‘different but equal’. Moreover, in a few lines it provides a framework for an entire internal market. 54 Using the ideas in Cassis it is possible to implement trade between states while still allowing Member States to maintain their own laws and avoiding the need for harmonisation.

50 See Case C-470/93 Verein gegen Unwesen in Handel und Gewerbe Köln v Mars GmbH [1995] ECR I-1923. 51 See Case C-288/89 Gouda v Commissariat voor de Media [1991] ECR I-4007; Directive 2006/123/EC on services

in the internal market [2006] OJ L376/36; see Chapter 19 . 52 See C. Joerges and J. Neyer , Deliberative Supranationalism Revisited , EUI Working Paper No. 2006/20, 25

( Florence , European University Institute , 2006 ) . 53 See Nicolaidis and Shaffer, above n. 46, 317; G. Davies , ‘ Is Mutual Recognition an Alternative to Harmonisation:

Lessons on Trade and Tolerance of Diversity from the EU ’ in F. Ortino and L. Bartels (eds.), Regional Trade Agree-ments and the WTO ( Oxford , Oxford University Press , 2006 ) 265 –80 .

54 For a very thorough discussion of the policy issues, see the special edition of the Journal of European Public Policy on mutual recognition: S. Schmidt (ed.), ‘ Mutual Recognition as a New Mode of Governance ’ ( 2007 ) 14 (5) JEPP ; K. Armstrong , ‘ Mutual Recognition ’ in C. Barnard and J. Scott (eds.), The Law of the European Single Market ( Oxford , Hart , 2002 ) 225 .

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Yet, it is open to powerful criticism from various perspectives. It has been claimed that applying mutual recognition results in non-economic concerns being trumped by free trade; that it crushes diversity and replaces it by a deregulated and uniform marketplace; 55 and yet also that it is ineffective in creating free trade, that mutual recognition is too open-ended and abstract to be effectively applied by national courts and authorities. 56 It can even therefore be seen as a stalking horse for harmonisation, an approach to free movement that is apparently based on local diversity of regulation but by its very failure to create a market turns into a justifi cation for centralised rules. 57

The fi rst criticism is that standards are not in fact equal in different states. While it may be true that all Member States generally ensure that their products are adequately safe, it is a fantasy to think that the quality guaranteed by different standards is the same. Some states have a laissez-faire approach to quality regulation, and are content to let the consumer decide what she is prepared to pay for. Others are strict, as will be seen in the subsequent section. Admitting goods made according to foreign laws therefore undermines the quality standards in force in strict states. The populations of those countries are no longer able to express their collective preference for a certain kind of strictly regulated market in which low quality goods are prohibited. Trade trumps both local democracy and product quality. 58

Moreover, mutual recognition has potential economic effects. The Court is quite clear that it is not the product rule as such which is contrary to Article 34, but its application to imports. Thus, Germany is able to apply its 25 per cent rule to domestically made liqueurs, just not to foreign ones. But this puts German producers at a distinct disadvantage. Alcohol is a signifi -cant part of the cost of such liqueurs (one of the reasons for the confl ict), so foreign liqueur will probably be cheaper. The German government is then faced with the choice between abandon-ing its rule for domestic producers, and moving to a laissez-faire marketplace, or continuing to enforce the rule and risking domestic producers being priced out of the market. Ultimately, as the German government argued in the case, there is a risk that the lowest standard state provides the de facto standard everywhere; their exports are the cheapest products in every shop in Europe. A regulatory race to the bottom is then feared as other states abandon their own rules. In fact, as discussed in Chapter 16 , it is notable that this does not always, or even often, happen but the risk is real in some circumstances.

The discussion above may suggest that mutual recognition tends to sacrifi ce non-economic concerns in the cause of free trade. However, the principle is also criticised from a free trade perspective, with the claim being that in practice it is ineffective. 59 The problem is that ap-plying Cassis entails balancing interests, since the possibility of derogations, the mandatory requirements, does exist. This balancing is so politically laden that it is seen as a heavy burden on national judges and authorities, who may well be inclined to defer to national laws and

55 See K. Alter and S. Meunier-Aitsahalia , ‘ Judicial Politics in the European Community: European Integration and the Pathbreaking Cassis de Dijon Decision ’ ( 1994 ) 26 Comparative Political Studies 535 .

56 See J. Pelkmans , ‘ Mutual Recognition in Goods: On Promises and Disillusions ’ ( 2007 ) 14 JEPP 699 ; Commission Report to the Council, Parliament and ESC, Second Biennial Report on the Application of the Principle of Mutual Recognition in the Single Market , COM(2002)419 fi nal, 23 July 2002.

57 See Davies, above n. 53; W. Kerber and R. van den Bergh , ‘ Mutual Recognition Revisited: Misunderstandings, Inconsistencies, and a Suggested Reinterpretation ’ ( 2008 ) 61 Kyklos 447 .

58 Kerber and van den Bergh, above n. 57; H.-C. von Heydebrand u.d. Lasa , ‘ Free Movement of Foodstuffs, Consumer Protection and Food Standards in the European Community: Has the Court Got it Wrong? ’ ( 1991 ) 16 ELRev . 391 .

59 See Pelkmans, above n. 56.

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quickly concede their necessity when faced with governmental arguments to that effect. 60 Ex-pecting national bodies to set aside national law to an extent suffi cient to really create a single market is perhaps unrealistic. Thus, it can be argued that mutual recognition has not turned out to be the legal panacea it may seem, and leaves many obstacles to movement in place. In practice, what often happens is that litigation over national product rules identifi es a particular problem, at which point the Commission may begin the process of harmonisation. Cassis de Dijon itself did not lead to a European market in which alcohol products are freely traded on the basis of that mutual recognition. On the contrary, shortly afterwards harmonising legisla-tion on alcohol levels was adopted.

Most of these abstract criticisms depend for their force upon the extent to which mandatory requirements actually limit the general rule of mutual recognition. It is thus these require-ments, rather than the general principle, which have been the concrete subject matter of post- Cassis legal debate.

(ii) Mandatory requirements

In Cassis de Dijon , the Court provided a list of the sorts of reasons which might justify re-stricting the free movement of goods. It mentioned the ‘effectiveness of fi scal supervision, the protection of public health, the fairness of commercial transactions and the defence of the con-sumer’. This list was broadened in subsequent cases, and the category of mandatory require-ments is now considered to be open-ended. A formulation which is often cited by the Court was used in Bellamy and English Shop , where the Court had to consider whether Belgium was justifi ed in applying its food labelling laws to imported English foodstuffs, which the Belgians claimed was necessary to protect the consumer.

Case C-123/00 Criminal Proceedings Against Bellamy and English Shop Wholesale

[2001] ECR I-2795

18. In that regard, it should be borne in mind that, in the absence of harmonisation of legislation, obstacles

to free movement of goods which are the consequence of applying, to goods coming from other

Member States where they are lawfully manufactured and marketed, rules that lay down requirements

to be met by such goods (such as those relating to designation, form, size, weight, composition,

presentation, labelling, packaging) constitute measures having equivalent effect which are prohibited by

Article [34 TFEU], even if those rules apply without distinction to all products, unless their application

can be justifi ed by a public-interest objective taking precedence over the free movement of goods . . .

An equally applicable rule restricting movement may therefore be justifi ed by any reason within the umbrella concept of the ‘public interest’. The Court has set certain limits to this con-cept, such as the rule that purely economic reasons may not be relied upon, 61 and these limits

60 See M. Jarvis , The Application of EC Law by National Courts: The Free Movement of Goods ( Oxford , Oxford University Press , 1998 ) 220 –1 .

61 Case 72/83 Campus Oil v Minister for Industry and Energy [1984] ECR 2727; J. Snell , ‘ Economic Aims as Justifi -cations for Restrictions on Free Movement ’ in A. Schrauwen (ed.), The Rule of Reason: Rethinking Another Classic of European Legal Doctrine ( Groningen , Europa Law Publishing , 2005 ) .

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are discussed further in Chapter 21 . However, the class of legitimate justifi cations remains broad. Nevertheless, in practice the majority of cases have concerned consumer protection, while those concerning environmental protection also form an important group. These are looked at in the next two sections, to show how the Court determines what is justifi ed and, in particular, what is proportionate.

The legal status of these judicially invented derogations is odd. Article 36 TFEU provides for exceptions to Article 34 where necessary to protect really important interests such as public health or security. 62 Yet when the Court referred to mandatory requirements in Cassis , it was not offering a broad interpretation of Article 36. On the contrary, it was creating a new class of exception to free movement, existing alongside and in addition to the exceptions in the Treaty. 63 These exceptions are in one sense broader than Article 36: they cover a wider range of interests. However, they are narrower than Article 36 in that they only apply to equally applicable measures. 64 Where a measure discriminates directly, an appeal to the doctrine of mandatory requirements may not be made.

(a) Consumer protection

The most common justifi cation for applying national product rules to imports is the protec-tion of the consumer. One of the most well-known examples is the German Beer case. 65 The Reinheitsgebot, a centuries-old German rule defi ning the ingredients permitted in beer, was challenged as contrary to Article 34. Many foreign beers used ingredients not on the list, vary-ing from rice to various chemical additives, and so were denied access to the German market under the name beer — they could be sold under some other name, say ‘rice-chemical alcoholic beverage’, but this was clearly unattractive. The German government claimed that the rule was necessary to prevent consumers being deceived about what they were buying: the German consumer had certain expectations, which beers made from non-conforming ingredients did not fulfi l. The impure brew was simply not, in German eyes, beer.

62 See Chapter 21 . 63 See P. Craig and G. de Búrca , EU Law (4th edn, Oxford , Oxford University Press , 2006 ) 706 –7 . 64 Case 788/79 Gilli and Andres [1980] ECR 2071. 65 Case 178/84 Commission v Germany (German beer) [1987] ECR 1227.

Case 178/84 Commission v Germany (German beer) [1987] ECR 1227

29. It is not contested that the application of article 10 of the Biersteuergesetz to beers from other

Member States in whose manufacture raw materials other than malted barley have been lawfully used,

in particular rice and maize, is liable to constitute an obstacle to their importation into the Federal

Republic of Germany.

30. Accordingly, it must be established whether the application of that provision may be justifi ed by

imperative requirements relating to consumer protection.

31. The German government’s argument that article 10 of the Biersteuergesetz is essential in order to

protect German consumers because, in their minds, the designation ‘Bier’ is inseparably linked to the

beverage manufactured solely from the ingredients laid down in article 9 of the Biersteuergesetz must

be rejected.

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The Court accepts that consumers may have preferences, for example for pure beer, and that their ability to satisfy these preferences is important and deserves protection. However, it takes the view that prohibiting the sale as ‘beer’ of any non-conforming product is disproportionate. Consumers can be adequately protected by a labelling requirement: if it is clear from the label which ingredients the beer contains and whether it is made according to the purity rules then this is suffi cient consumer protection, and is more proportionate because it has a far lesser ef-fect on interstate trade. It is easier for foreign beer producers to amend their labels than their product.

This is the Court’s consistent approach. It insists that matters of quality and preference, rather than safety or health, do not need to be dealt with by bans, but can be more propor-tionately addressed by rules on labels. 66 This is a coherent part of the Court’s relatively liberal philosophy of consumer protection, which assumes that if adequate information is available to

32. Firstly, consumers’ conceptions which vary from one Member State to the other are also likely to evolve

in the course of time within a Member State. The establishment of the common market is, it should

be added, one of the factors that may play a major contributory role in that development. Whereas

rules protecting consumers against misleading practices enable such a development to be taken into

account, legislation of the kind contained in article 10 of the Biersteuergesetz prevents it from taking

place. As the court has already held in another context (Case 170/78 Commission v United Kingdom ),

the legislation of a Member State must not ‘crystallize given consumer habits so as to consolidate an

advantage acquired by national industries concerned to comply with them’.

33. Secondly, in the other Member States of the Community the designations corresponding to the German

designation ‘Bier’ are generic designations for a fermented beverage manufactured from malted barley,

whether malted barley on its own or with the addition of rice or maize. The same approach is taken

in Community law as can be seen from heading no. 22.03 of the common customs tariff. The German

legislature itself utilizes the designation ‘Bier’ in that way in article 9(7) and (8) of the Biersteuergesetz in

order to refer to beverages not complying with the manufacturing rules laid down in article 9(1) and (2).

34. The German designation ‘Bier’ and its equivalents in the languages of the other Member States of the

Community may therefore not be restricted to beers manufactured in accordance with the rules in force

in the Federal Republic of Germany.

35. It is admittedly legitimate to seek to enable consumers who attribute specifi c qualities to beers

manufactured from particular raw materials to make their choice in the light of that consideration.

However, as the court has already emphasized, that possibility may be ensured by means which do not

prevent the importation of products which have been lawfully manufactured and marketed in other

Member States and, in particular, ‘by the compulsory affi xing of suitable labels giving the nature of

the product sold’. By indicating the raw materials utilized in the manufacture of beer ‘such a course

would enable the consumer to make his choice in full knowledge of the facts and would guarantee

transparency in trading and in offers to the public’. It must be added that such a system of mandatory

consumer information must not entail negative assessments for beers not complying with the

requirements of article 9 of the Biersteuergesetz.

66 See e.g. Case 261/81 Rau v De Schmedt [1982] ECR 3961; Case 407/85 Drei Glocken [1988] ECR 4233; see also Case 788/79 Gilli and Andres [1980] ECR 2071. See also Joined Cases C-158/04 and C-159/04 Alfa Vita v El-liniko Dimosio and Nomarchiaki Aftodioikisi Ioanninon [2006] ECR I-8135, para. 23.

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consumers they are then able to make their own decisions about quality. 67 This is by contrast with the more paternalistic approach refl ected in the rules in Cassis and German Beer , where the state determined what consumers could buy and what they could not.

This information-based approach assumes that consumers read labels, and are reasonably circumspect. 68 It is vulnerable to the criticism that in fact these assumptions are not true, and consumers will simply seize a product without realising that it is not quite what they are used to. There is a considerable scholarship on whether the information approach is a sensible and proportionate approach to consumer protection, or rather its sacrifi ce on the altar of free trade. 69

This debate can be kept in perspective by remembering that it is only quality that is in issue. Where there is a genuine health risk, the Court is much more deferential to national rules. 70 Moreover, there is an issue of principle involved, which is addressed in paragraph 32 of the judgment above: consumer behaviour and expectations are not fi xed, but changing, and so the law should not try to entrench them as they are, but provide a framework within which they can develop. The European consumer may be unused to diversity, but the goals of the internal market are that she should become used to this, and this means she will need to become someone used to making decisions on the basis of information, rather than having products selected for her by the state. Whether this is necessarily an improvement in qual-ity of life is another issue, but it is a persuasive corollary of the free trade agreement which Article 34 represents.

In the judgment, this question of consumer change was framed around the issue of naming. The German government had argued that impure beer was, in the eyes of the local consumer, not beer. The Court takes this as an example of the kind of expectation which must not be crystallised in law, precisely because it has a trade-hindering effect. 71 The Court further sug-gests that what is ‘beer’ should be understood in the context of other national defi nitions and the EU customs defi nition. National product defi nitions no longer stand in isolation.

This has recurred in several cases. Italy challenged the phrase ‘apple vinegar’ saying that it was a fraud on consumers because vinegar was inherently made from grapes, while France challenged foreign foie gras which did not entirely conform to French rules. 72

67 See S. Weatherill , EU Consumer Law and Policy ( Northampton , Edward Elgar , 2005 ) ; M. Radeideh , Fair Trading in EC Law: Information and Consumer Choice in the Internal Market ( Groningen , Europa Law Publishing , 2005 ) .

68 See Case C-210/96 Gut Springenheide [1998] ECR I-4657; Case C-51/94 Commission v Germany [1995] ECR I-3599; Case 27/80 Fietje [1980] ECR 3839.

69 See L. W. Gormley , ‘ The Consumer Acquis and the Internal Market ’ ( 2009 ) 20 EBLRev . 409 ; von Heydebrand u.d. Lasa, above n. 58; C. Macmaolain , ‘ Waiter, There’s a Fly in my Soup. Yes Sir, that’s E120: Disparities Between Actual Individual Behaviour and Regulating Labelling for the Average Consumer in EU Law ’ ( 2008 ) 45 CMLRev . 1147 ; M. Radeideh , Fair Trading in EC Law: Information and Consumer Choice in the Internal Market ( Groningen , Europa Law Publishing , 2005 ) ; H. Unberath and A. Johnston , ‘ The Double-headed Approach of the ECJ Concern-ing Consumer Protection ’ ( 2007 ) 44 CMLRev . 1237 ; S. Weatherill , ‘ Recent Case Law Concerning the Free Move-ment of Goods: Mapping the Frontiers of Market Deregulation ’ ( 1999 ) 36 CMLRev . 51 ; S. Weatherill , EU Consumer Law and Policy ( Northampton , Edward Elgar , 2005 ) .

70 See Chapter 21 . 71 See also Case C-358/01 Commission v Spain [2003] ECR I-13145, para. 52. 72 Case 788/79 Gilli and Andres [1980] ECR 2071; Case C-166/03 Commission v France (Gold) [ 2005] ECR I-6535;

Case C-12/00 Commission v Spain (Spanish chocolate) [2003] ECR I-459; Case C-14/00 Commission v Italy (Choc-olate) [2003] ECR I-513; Case C-358/01 Commission v Spain [2003] ECR I-13145; see also Case C-6/02 Commis-sion v France [2003] ECR I-2389.

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If someone tried to market a generic paté as foie gras, it would be justifi able to prevent this on consumer protection grounds. However, the fact that foie gras is made in slightly different ways in other places is not enough to justify a prohibition on using the name.

The concept of the informed and circumspect consumer defi nes the Court’s approach to consumer protection, but leaves open the question of what information the consumer can be expected to process and understand, and how much information she needs. While labelling re-quirements are in general the legislative approach that states should follow, even these may be disproportionate under some circumstances. Because the label is a physical part of the product, national labelling rules are themselves product rules in the Cassis sense, and so must still be justifi ed. Labelling requirements impose relatively low costs on producers, and so are prefer-able to rules about the product itself, but they do impose some costs, so that if the labelling rules are in some sense unreasonable then these too will be contrary to Article 34.

There are two kinds of potential labelling problems. One is where the information to be displayed is in some sense discriminatory. The Court warned about this in German Beer . If, for example, non-conforming beer was required to bear a red stamp saying ‘impure’ then while this might not be very diffi cult to comply with, and while it might make matters clear to the consumer, it would nevertheless contravene Article 34 because it would have an unnecessarily negative effect on marketing of foreign beer, and so would be disproportionate. Something rather similar to this occurred in the Irish Souvenirs case, in which Ireland proposed that souvenirs not made in Ireland be stamped with their country of production or with the word ‘foreign’. 73 A requirement to indicate the country of production, even if it applies to all goods, the Court has found, may have the effect of steering consumers towards national goods, while it is not in fact necessary information. 74

The other kind of labelling problem is where the information to be displayed is pointless. When Belgium required medicinal labels to bear the ‘notifi cation number’ which was associ-ated with the application for approval to sell that medicine in Belgium, the Court found this to be disproportionate. 75 It imposed a small, but not trivial, burden on producers while realisti-cally, what use was it to the consumer?

Case C-184/96 Commission v France [1998] ECR I-6197

23. So far as concerns the argument based on the necessity to prevent offences with respect to false

descriptions, the Court, in its judgment in Deserbais , did not exclude the possibility that Member States

could require those concerned to alter the denomination of a foodstuff where a product presented

under a particular denomination is so different, as regards its composition or production, from the

products generally known under that denomination in the Community that it cannot be regarded as

falling within the same category (Case 286/86 Ministère Public v Deserbais [1988] ECR 4907).

24. Nonetheless, the mere fact that a product does not wholly conform to the requirements laid down in

national legislation on the composition of certain foodstuffs with a particular denomination does not

mean that its marketing can be prohibited.

73 Case 113/80 Commission v Ireland (Irish souvenirs) [1981] ECR 1625. 74 Ibid ; Case 207/83 Commission v United Kingdom (marks of origin) [1985] ECR 1201. 75 Case C-217/99 Commission v Belgium [2000] ECR I-10251; Case C-55/99 Commission v France [2000] ECR

I-11499.

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The protective approach to product regulation which was traditionally applied to the sub-stance of the goods can also be seen in national rules on packaging and information. In Clin-ique , for example, the German government objected to the marketing of cosmetics under that name, because it was too similar to Klinik , the German word for hospital. 76 Consumers might therefore think that the products were medically approved, and believe that they really would look younger or more beautiful if they used them.

The Court disagreed. In the circumstances (the products were sold not by pharmacists but in shops selling make-up), it felt the dangers did not justify the trade-hindering effects of the rule. The European consumer is expected to show a certain awareness and scepticism. If this is not yet always reality, that fact does not justify legislation entrenching passivity and naivety.

(b) Protection of the environment

Environmental issues are often dealt with under Article 36, and are discussed further in Chapter 21 . However, the protection of the environment has also been recognised as a manda-tory requirement, especially in the context of recycling schemes and their effect on trade.

These recycling cases have been about soft drinks containers. In each case a state has im-posed obligations on producers related to the types of containers they used for their drinks. In Commission v Denmark , a system was successfully challenged in which only certain types of soft drinks containers were permitted in Denmark, the goal being to make recycling more ef-fi cient and practical. 77 Since this dramatically limited the possibilities for importing soft drinks from elsewhere in Europe where many different kinds of containers were in use, the rule was disproportionate. The reasoning of the Court was that it was not necessary to limit the types of containers, since the goal of promoting recycling could be met by other means.

The case was heavily criticised. 78 While it is, of course, true that many different kinds of containers can be recycled, the point is that this is expensive. A recycling scheme is most ef-fi cient if it only has to deal with a limited range of packaging types. In reality, recycling will be successful if it is not too expensive, and so the Danish considered that their strict limits on container types were in fact an essential part of increasing the amount of recycling. That the Court did not consider economic reality, but merely the theoretical fact that other kinds of containers were in principle also recyclable, suggested that environmental protection was not being taken seriously, and would be subordinated to trade.

In more recent cases, the environment has been more successful. In Radlberger Getränkege-sellschaft , the German government amended its laws to require producers selling more than a certain proportion of soft drinks in non-reusable containers to set up a deposit-and-return scheme, whereby they would take back the waste packaging they generated, and deal with it themselves. 79 Since such a scheme costs money, producers using a large proportion of non-reusable packaging faced a cost burden which might hinder their access to the German market.

76 Case C-315/92 Verband Sozialer Wettbewerb v Clinique Laboratories [1994] ECR I-317. 77 Case 302/86 Commission v Denmark [1988] ECR 4607. 78 See J. Scott , EC Environmental Law ( London , Longman , 1998 ) 69 –72 , quoted in J. Holder and M. Lee , Environ-

mental Protection: Law and Policy ( Cambridge , Cambridge University Press , 2007 ) 179 ; H. Temmink , ‘ From Danish Bottles to Danish Bees: The Dynamics of Free Movement of Goods and Environmental Protection — A Case Law Analysis ’ ( 2000 ) 1 YEEL 61 .

79 Case C-309/02 Radlberger Getränkegesellschaft v Land Baden-Württemberg [2004] ECR I-11763; see also the almost identical Case C-463/01 Commission v Germany [2004] ECR I-11705, decided on the same day.

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The Court was particularly concerned about the fact that non-German producers used more non-recyclable packaging than German ones, so that they would be relatively more affected. Moreover, a return system is clearly more expensive if the goods have to be returned to a distant production location in another state than if production is local. The scheme therefore imposed a greater burden on more distant producers. In the light of this, the Court considered whether the environmental benefi ts outweighed these trade concerns:

Case C-309/02 Radlberger Getränkegesellschaft mbH & Co . v Land Baden-Württemberg

[2004] ECR I-11763

75. In accordance with settled case-law, national measures capable of hindering intra-Community trade

may be justifi ed by overriding requirements relating to protection of the environment provided that the

measures in question are proportionate to the aim pursued.

76. The obligation to establish a deposit and return system for empty packaging is an indispensable element

of a system intended to ensure that packaging is reused.

77. With regard to non-reusable packaging, as the defendant in the main proceedings and the German

Government state, the establishment of a deposit and return system is liable to increase the proportion

of empty packaging returned and results in more precise sorting of packaging waste, thus helping to

improve its recovery. In addition, the charging of a deposit contributes to the reduction of waste in the

natural environment since it encourages consumers to return empty packaging to the points of sale.

78. Furthermore, insofar as the rules at issue in the main proceedings make the entry into force of a new

packaging-waste management system conditional on the proportion of reusable packaging on the

German market, they create a situation where any increase in sales of drinks in non-reusable packaging

on that market makes it more likely that there will be a change of system. Inasmuch as those rules

thus encourage the producers and distributors concerned to have recourse to reusable packaging, they

contribute towards reducing the amount of waste to be disposed of, which constitutes one of the

general objectives of environmental protection policy.

79. However, in order for such rules to comply with the principle of proportionality, it must be ascertained

not only whether the means which they employ are suitable for the purpose of attaining the desired

objectives but also whether those means do not go beyond what is necessary for that purpose.

80. In order for national rules to satisfy the latter test, they must allow the producers and distributors

concerned, before the deposit and return system enters into force, to adapt their production methods

and the management of non-reusable packaging waste to the requirements of the new system. While

it is true that a Member State may leave to those producers and distributors the task of setting up that

system by organising the taking back of packaging, the refunding of sums paid by way of deposit and

any balancing of those sums between distributors, the Member State in question must still ensure that,

at the time when the packaging-waste management system changes, every producer or distributor

concerned can actually participate in an operational system.

81. Legislation, such as the VerpackV, that makes the establishment of a deposit and return system

dependent on a packaging reuse rate, which is certainly advantageous from an ecological point of view,

complies with the principle of proportionality only if, while encouraging the reuse of packaging, it gives

the producers and distributors concerned a reasonable transitional period to adapt thereto and ensures

that, at the time when the packaging-waste management system changes, every producer or distributor

concerned can actually participate in an operational system.

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In principle, therefore, the Court was prepared to accept rules which would not only have a signifi cant effect on trade, but probably impact on importers much more than on domestic producers, because those rules did serve an important environmental goal. The only require-ments that it imposed, in the name of proportionality, was that producers be given a reasonable amount of time to adapt to the new rules and that the system be so constructed that producers were in practice able to participate and comply.

4 SELLING ARRANGEMENTS AND KECK

The acceptance in Cassis that equally applicable rules could be MEQRs led to cases testing the limits of this principle, applying it to any kind of measure which could be argued to have a negative effect on import quantities. Most well-known, the rules on Sunday trading in the United Kingdom were challenged as contrary to Article 34: if shops could open on Sundays they could sell more goods, and some of those goods would be imported. 80 Ergo , requiring shops to close on Sundays limited imports.

This turns a Treaty Article that is apparently about goods into a tool for policing wider socio-economic regulation, which brings with it risks of constitutional discontent among the Member States. Moreover, it is ineffi cient. In the Sunday trading cases, the Court unsurpris-ingly found that the measures were justifi ed by legitimate social goals, and therefore not con-trary to the Treaty. All that was happening was that many creative cases were being brought, but they were not being won. Such a broad reading of the Treaty was not therefore opening up the internal market or increasing trade. It was just increasing work for the Court.

In Keck , the Court fi nally set a limit to the kinds of equally applicable rules which could be MEQRs. It excluded one group, which it called selling arrangements. These, it said, were simply outside the scope of the Treaty, as long as they were in fact equal in impact on both domestic goods and imports.

Joined Cases 267/91–268/91 Keck and Mithouard [1993] ECR I-6097

11. By virtue of Article [34 TFEU], quantitative restrictions on imports and all measures having equivalent

effect are prohibited between Member States. The Court has consistently held that any measure which

is capable of directly or indirectly, actually or potentially, hindering intra-Community trade constitutes a

measure having equivalent effect to a quantitative restriction.

12. National legislation imposing a general prohibition on resale at a loss is not designed to regulate trade

in goods between Member States.

13. Such legislation may, admittedly, restrict the volume of sales, and hence the volume of sales of products

from other Member States, insofar as it deprives traders of a method of sales promotion. But the

question remains whether such a possibility is suffi cient to characterize the legislation in question as a

measure having equivalent effect to a quantitative restriction on imports.

14. In view of the increasing tendency of traders to invoke Article [34 TFEU] 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.

80 See e.g. Case C-145/88 Torfaen Borough Council v B & Q [1989] ECR 3851; Case C-169/91 Stoke-on-Trent and Norwich City Council v B & Q [1992] ECR I-6635; for full discussion see C. Barnard , The Substantive Law of the EU (2nd edn, Oxford , Oxford University Press , 2007 ) 137 –43 .

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The rule that the Court lays down is that rules governing the way products are sold are not MEQRs within the meaning of Dassonville and Article 34. States may therefore legislate however they like on matters such as advertising, shop opening hours, sales techniques and prices. 81 However, this is subject to the proviso that the measures taken must not have a greater effect on imports than they do on domestic goods or producers. If this is the case, then even measures concerning selling arrangements will be MEQRs. It has been made clear in later cases that the usual approach then applies: such measures will be prohibited unless they are justifi ed by a mandatory requirement or a Treaty exception. 82

The reasoning provided by the Court for this position is that, it says, rules on selling arrange-ments do not generally have the effect of preventing access to the market for imports, nor of impeding it any more than is the case for domestic products. If a shop has to close on Sundays, or advertising of certain goods is prohibited, this does not actually prevent those goods being sold. It may have some effect on their sales, but in general this effect is the same for domestic and foreign goods. The implicit contrast is with product rules, which do tend to prevent non-conforming products reaching the market, and which also tend to impact on foreign goods more than domestic.

Keck therefore interprets Article 34 to prohibit two things: (i) measures which have a greater effect on imports than on domestic products, and (ii) measures which effectively prevent certain

15. It is established by the case-law beginning with ‘ Cassis de Dijon ’ that, in the absence of harmonization

of legislation, obstacles to free movement of goods which are the consequence of applying, to goods

coming from other Member States where they are lawfully manufactured and marketed, rules that lay

down requirements to be met by such goods (such as those relating to designation, form, size, weight,

composition, presentation, labelling, packaging) constitute measures of equivalent effect prohibited

by Article [34 TFEU]. This is so even if those rules apply without distinction to all products unless their

application can be justifi ed by a public-interest objective taking precedence over the free movement of

goods.

16. 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.

17. Provided that those conditions are fulfi lled, 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 TFEU].

18. Accordingly, the reply to be given to the national court is that Article [34 TFEU] of the EEC Treaty is to

be interpreted as not applying to legislation of a Member State imposing a general prohibition on resale

at a loss.

81 See below nn. 97–8 for examples of the range of selling arrangements. 82 See e.g. Case C-20/03 Burmanjer [2005] ECR I-4133; Case C-441/04 A-Punckt Schmuckhandels [2006] ECR

I-2093.

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imports from being sold. 83 This second category does not appear to be dependent upon show-ing any unequal effect, although it may be argued that in practice the complete exclusion of a class of goods from the marketplace almost invariably has the effect of protecting established, usually national, alternatives.

Keck therefore broadly refl ects an inequality-based understanding of Article 34. It is for this reason that Alfa Vita , discussed above, 84 is so surprising: the measure involved was argued neither to be unequal in effect, nor to prevent access completely, but merely to reduce sales. Alfa Vita and Keck apply to different categories of measures, so there is no hard confl ict, but there is a conceptual inconsistency. It is as if the idea of an MEQR underlying the law on sell-ing arrangements is not the same as that underlying the law on other types of MEQR. This highlights the ongoing policy tensions surrounding Article 34, between those who would like to see it used to reduce all unjustifi ed regulatory inhibition of economic activity ( Alfa Vita ), and those who remain attached to a non-discrimination rule ( Keck ).

Keck is, and has always been, a controversial case, largely because its business sense has been doubted. 85 In reality, it has been argued, rules on advertising may have a greater effect on sales of goods than some product rules do. Adapting a product is not always expensive or diffi cult, while there may be contexts where an inability to advertise, or to sell via certain channels, or to offer certain kinds of discounts (all of which are selling arrangements) might seriously undermine a marketing campaign and make market access impractical. Keck is of-ten considered to be a very formalist approach to Article 34. Instead of trying to distinguish between rules according to their actual effect on trade, it divides them into convenient, but somewhat arbitrary, groups which do not correspond to practical importance for the trader.

The advantage of Keck is that it is relatively clear. In most cases it is easy to distinguish be-tween a selling arrangement and a product rule, and both states and market actors are able to determine what their legal position is. An alternative interpretation of Article 34 which is some-times put forward is that it should prohibit all measures which substantially restrict market ac-cess. This interpretation is very close to the goals of the Article, and has an obvious integrationist appeal, but would result in a very open and vague rule. It is, moreover, open to question whether such an open norm would be effective in practice because it would be so diffi cult to apply in an apparently apolitical way, perhaps causing national judges to be shy of using it forcefully. 86

There is also a principled defence of Keck . Unlike product rules, selling arrangements do not impose a double burden on imports, nor do selling arrangements require products to be adapt-ed at all, so there is no question of excluding non-conforming goods. There is a fundamental difference between the market effects of selling arrangements and the market effects of product rules, which does not make it entirely obvious that they should be treated in the same way.

Keck also needs to be seen in constitutional terms given the important limit it sets to the Union’s capacity to second-guess state regulatory choices. Maduro’s constitutional interpre-tation of Keck has been one of the most infl uential. 87 He notes that when states regulate

83 Keck and Mithouard , above n. 2, paras. 16 and 17. 84 See p. 751. 85 L. Gormley , ‘ Two Years after Keck ’ ( 1996 ) 19 Fordham International Law Journal 866 ; Weatherill, above n. 26. Cf.

L. Rossi , ‘ Economic Analysis of Article 28 after the Keck Judgment ’ ( 2006 ) 7 (5) German Law Journal 479 . 86 See D. Wilsher , ‘ Does Keck Discrimination Make Any Sense? An Assessment of the Non-discrimination Principle

within the European Single Market ’ ( 2008 ) 33 ELRev . 3 . 87 M. Poiares Maduro , We the Court ( Oxford , Hart , 1998 ) .

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economic activity this does not only have an effect on domestic actors, but also on foreign ones who want to participate in the domestic market. Yet, while domestic actors are represent-ed in the law-making process via national democratic institutions, foreign actors, in general, are not. States therefore impose costs on non-domestic actors without taking this into account. In the context of an integrating Union in which states accept a certain degree of responsibil-ity towards each other, this should be seen as a democratic problem. The justifi cation for the Court’s intervention in national economic regulation is therefore that it safeguards the interests of the unrepresented foreign actor.

This logic explains Cassis , because when states regulate products they usually produce legis-lation refl ecting local production norms – established tastes and products – and do not consider what is accepted or usual elsewhere, with the effect that their legislation tends to have a pro-tectionist effect. However, where selling arrangements are concerned this is not the case. The legislator makes a trade-off between economic freedom and other interests, but in general the interests and concerns of the importer are exactly the same as those of the domestic producers. Both want, for example, freedom to advertise and set prices, and both want this for the same reasons. If the domestic producers are represented in the domestic democratic process then this serves as an adequate proxy for foreign producers, and there should usually be no need for a democratically-justifi ed correction of national law by the Court of Justice.

In any case, Keck has resisted criticism from many commentators and is still a pillar of the Court’s case law. Its apparent clarity and ease of use are among the major reasons for its resil-ience. Yet, while most of the time it is fairly easy to see whether a measure is a selling arrange-ment and whether it has an unequal effect, there are cases where this becomes very diffi cult. Recently the Court has seemed to take a slightly narrower approach to what a selling arrange-ment is, as if, having used Keck to limit Article 34, it now wishes to set limits to Keck . 88

(i) The notion of a selling arrangement

The distinction between a selling arrangement and a product rule was laid down in Familia-press . 89 A product rule is a measure which requires some physical aspect of the product or its packaging or labelling to be changed, while a selling arrangement is concerned only with the way in which goods are sold or marketed. Measures conforming to neither defi nition are to be considered under Dassonville .

The boundary between categories becomes diffi cult when measures are concerned with the sale of particular types of products, for example a rule restricting sale of alcohol with a per-centage above 25 per cent to licensed shops. Is that a product rule, because it is to do with the amount of alcohol in the drink, or a selling arrangement, because it regulates the place where the product is sold? The Court seems to fi nd rules like this to be product rules, because the ob-ligation or burden that they contain is specifi cally linked to the physical characteristics of the product. There is thus a pressure, if not an absolute requirement, on producers to amend their product to avoid the burdensome rule.

88 See P. Pecho , ‘ Good-Bye Keck : A Comment on the Remarkable Judgment in Commission v Italy ’ ( 2009 ) 36 LIEI 257 ; A. Tryfonidou , ‘ Was Keck a Half-baked Solution After All? ’ ( 2007 ) 34 LIEI 167 .

89 Case C-368/95 Familiapress v Heinrich Bauer Verlag [1997] ECR I-3689. See also Case C-159/00 Sapod Audic [2002] ECR I-5031.

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For example, in Schwarz , an Austrian rule was in issue which prohibited the sale of un-wrapped bubble gum from vending machines. 90 This was said to be unhygienic. The Court found that this was a product rule because those ‘importers wishing to put those goods up for sale in Austria have to package them’. A producer who wanted to sell bubble gum to vend-ing machine operators in Austria would have to make adjustments to her production process. Similarly, in Dynamic Medien , a rule prohibiting the sale by mail order of DVDs without an age-classifi cation sticker was found to be a product rule, because the rule, while restricting the method of sale, was linked to a physical part of the packaging. 91

By contrast, Morellato concerned an Italian law on semi-baked bread. 92 This is bread that is bought by shops as half-baked frozen dough. The shops then fi nish baking it in their own ovens. This enables them to sell warm fresh bread, without having all the facilities for making bread from scratch. The process is quite controversial in some countries, because it threatens the traditional artisanal baker, and enables all kinds of shops to apparently sell their own fresh-baked bread. It was in this context that Italy required shops selling bread made by this process to prepackage it in bags with labels clearly indicating its nature. The measures informed the consumer, but also distinguished the bread from bread made on the premises, which did not need to be packaged, allowing this latter to preserve some distinctive aura of naturalness.

The Court found that the measure was a selling arrangement.

Case C-416/00 Morellato [2003] ECR I-9343

32. The distinctive feature of the main proceedings is that the product put on sale by Mr Morellato was

imported at a stage when its production process was not yet fi nished. In order to be able to market

the product in Italy as bread ready for consumption, it was necessary to complete the baking of the

pre-baked bread imported from France.

33. The fact that a product must, to a certain extent, be transformed after importation does not in itself

preclude a requirement relating to its marketing from falling within the scope of application of

Article [34 TFEU]. It is possible that, as in the main proceedings, the imported product is not simply a

component or ingredient of another product but in reality constitutes the product that is intended for

marketing as soon as a simple transformation process has been carried out.

34. In such a situation, the relevant question is whether the requirement for prior packaging laid down in

the legislation of the Member State of import makes it necessary to alter the product in order to comply

with that requirement.

35. In the present case, nothing in the fi le indicates that it was necessary for the pre-baked bread, as

imported into Italy, to be altered in order to comply with that requirement.

36. In those circumstances, the requirement for prior packaging, since it relates only to the marketing of the

bread which results from the fi nal baking of pre-baked bread, is in principle such as to fall outside the

scope of Article [34 TFEU], provided that it does not in reality constitute discrimination against imported

products.

90 Case C-366/04 Georg Schwarz v Bürgermeister der Landeshauptstadt Salzburg [2006] ECR I-10139. 91 Case C-244/06 Dynamic Medien Vertriebs GmbH v Avides Media AG [2008] ECR I-1505. 92 Case C-416/00 Morellato [2003] ECR I-9343.

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As in Schwarz the product had to be packaged before it could be sold. There was thus a physi-cal adjustment necessary. However, the difference was that in Schwarz the nature of the adjust-ment was such that it could only realistically be done by the producer. One could not expect vending machine operators to put balls of bubble gum in individual sealed plastic bags. Schwarz therefore imposed a production burden. However, in Morellato , there was no need for the pro-ducer of the semi-baked dough to change anything at all. While shops had to put the bread in bags, they had no need to get those bags from the dough producers, and the packaging had to be done by the shops, not by the producers, since, as the Court said, the production process was incomplete when the dough was delivered – it still had to be partly baked. Thus, although Morellato is superfi cially similar to Schwarz and Dynamic Medien , it is very different from the perspective of the producer of the imported product. These cases highlight that the question de-termining whether a measure is a selling arrangement or a product rule is whether that producer is required, or pressured, to change some physical aspect of the product that she ships.

A variation on Morellato was offered by Alfa Vita , in which ‘bake-off’ products were also considered. 93 Greek law required that vendors of these had to have all the facilities that were required of a normal bakery, which included areas for kneading bread and a fl our store. Clearly such facilities were inappropriate in, for example, a supermarket, and the law was again an attempt to protect traditional bakeries. The Court, however, found that this could not be con-sidered a selling arrangement because it aimed ‘to specify the production conditions for bakery products’. It was not, unlike Morellato , about the circumstances of sale, but rather about the fi nal stage of production.

On the other hand, the rule in Alfa Vita does not pressure the producer of the bake-off dough to change their product. This is probably why the case was decided without reference to Cassis , and not treated as a product rule. Nevertheless, the imposition of a cost imposed on vendors of bake-off bread (they had to maintain facilities) might tend to discourage them from selling it, so that it could have an effect on imports. Hence, it was treated as a general MEQR within Dassonville .

Finally, a number of recent cases have concerned use of goods, and whether usage rules should be seen as selling arrangements or not. Once again, the Court seems to be choosing to confi ne that category to its literal meaning. In Commission v Italy , Åklagaren v Mickelsson and Roos , and Commission v Portugal , which concerned rules prohibiting the use of motorcycle trailers, jet-skis and tinted plastic window stickers for cars respectively, the Court found Keck not to apply. 94 The reason why these rules were found to be MEQRs was discussed above. 95 However, the reason why they were not selling arrangements was not explained by the Court explicitly, and seems to be no more complicated than the fact that they did not in fact concern the circumstances of sale. 96

(ii) Unequal effect of selling arrangements

Where a selling arrangement has a greater effect on imported products than on domestic ones, it will fall within Article 34, and will be prohibited unless justifi ed. If it discriminates directly a justifi -cation must be sought in Article 36, while if it is equally applicable but tends as a matter of fact to burden imports more then it may be saved by proportionate reliance on a mandatory requirement.

93 Case C-188/04 Alfa Vita v Elliniko Dimosio and Nomarchiaki Aftodioikisi Ioanninon [2006] ECR I-8135. 94 See above nn. 20–2. 95 See pp. 750–1. 96 See also Case C-170/04 Klas Rosengren and Others v Riksåklagaren [2007] ECR I-4071.

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For some years after Keck was decided, this proviso was largely theoretical, with the Court being reluctant to investigate whether a measure might have some unequal effect. 97 There are good reasons for this. Restrictions on selling arrangements tend to keep markets static, but this tends to be to the advantage of incumbents and the disadvantage of market newcomers. Since the former are often national it can be argued that most selling arrangements in fact hurt importers most. An over-realistic approach to the proviso might therefore bring most selling arrangements back within Article 34 and once again extend that Article beyond the judicial and constitutional comfort zone.

Nevertheless, in several cases, most importantly De Agostini and Gourmet International , the Court has recognised that the above logic could apply, particularly where advertising is concerned. 98 The former case concerned television advertising aimed at children, and the latter case concerned advertising of alcohol in Sweden. Bans on these, claimed the litigants, preserved domestic incumbents at the expense of foreign ‘wannabe’ market entrants. In De Agostini , the Court left it to the national court to decide whether the rule did, as a matter of fact, affect importers more. By contrast, in Gourmet , it felt able to take a view itself.

Case C-405/98 Konsumentombudsmannen (KO) v Gourmet International Products AB

[2001] ECR I-1795

19. The Court has also held… that it cannot be excluded that an outright prohibition, applying in one

Member State, of a type of promotion for a product which is lawfully sold there might have a greater

impact on products from other Member States.

20. It is apparent that a prohibition on advertising such as that at issue in the main proceedings not only

prohibits a form of marketing a product but in reality prohibits producers and importers from directing

any advertising messages at consumers, with a few insignifi cant exceptions.

21. Even without its being necessary to carry out a precise analysis of the facts characteristic of the

Swedish situation, which it is for the national court to do, the Court is able to conclude that, in the case

of products like alcoholic beverages, the consumption of which is linked to traditional social practices

and to local habits and customs, a prohibition of all advertising directed at consumers in the form of

advertisements in the press, on the radio and on television, the direct mailing of unsolicited material or

the placing of posters on the public highway is liable to impede access to the market by products from

other Member States more than it impedes access by domestic products, with which consumers are

instantly more familiar.

97 See e.g. Case C-391/92 Commission v Greece (Greek milk) [1995] ECR I-1621; Joined Cases 69/93 and 258/93 Punto Casa v Sindaco del Comune di Capena [1994] ECR I-2355.

98 See also Case C-254/98 Schutzverband v TK-Heimdienst [2000] ECR I-151; Case C-531/07 Fachverband der Buch- und Medienwirtschaft , Judgment of 30 April 2009; Case C-20/03 Burmanjer [2005] ECR I-4133; Case C-441/04 A-Punckt Schmuckhandels [2006] ECR I-2093; Case C-322/01 Deutscher Apothekerverband v DocMorris [2003] ECR I-14887; see also Case C-71/02 Karner [2004] ECR I-3025.

The key factor was the nature of the product. Alcoholic drinks are not usually bought only on price, but also on the basis of tradition, reputation, image and brand. Market entry is very diffi cult without the chance to speak directly to consumers via advertising.

Other recent examples of unequal selling arrangements include DocMorris , in which the Court found that a prohibition on Internet sales of pharmaceutical products had an unequal ef-fect because it was inevitably pharmacies at a distance who would be most affected, and these

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were most likely to be foreign. 99 The physical pharmacy, inevitably domestic, was protected from pharmacies abroad wishing to supply products from other states. Most recently, in Fach-verband , the Court found that minimum book prices deprived imports, which might otherwise be cheaper than domestic goods, of an important competitive advantage. 100 Although the goal of the rule, protecting cultural diversity, was legitimate, a uniform price for domestic books and imports was disproportionate. The Court found that a minimum price could be set for im-ports, but it had to be one which refl ected the possibility of cheaper production abroad.

5 ARTICLE 35 TFEU AND RESTRICTIONS ON EXPORTS

Article 35 is the equivalent of Article 34 for exports, and provides:

Quantitative restrictions on exports, and all measures having equivalent effect, shall be

prohibited between Member States.

The leading case until recently was Groenveld , which concerned a ban on the possession of horsemeat by sausage makers in the Netherlands. 101 This was to make Dutch sausages acceptable in states where horsemeat was prohibited, by removing any risk of contamination. The measure was therefore aimed at protecting exports. However, a sausage producer who wanted to branch out into horsemeat sausages attempted to overturn the rule by claiming that it contravened Article 35. Since he could not possess horsemeat, he could not export horsemeat sausages.

Although the Dutch rule could be conceived of as a product rule in the Cassis sense, limiting the way sausages are produced, the Court found that the measure fell outside Article 35, since it applied to all producers and products, whether aimed for the domestic market or for export:

7. That provision concerns national measures which have as their specifi c object or effect the

restriction of patterns of exports and thereby the establishment of a difference in treatment

between the domestic trade of a Member State and its export trade in such a way as to provide

a particular advantage for national production or for the domestic market of the state in

question at the expense of the production or of the trade of other Member States.

This made clear that Article 35 has its own logic, and Article 34 reasoning cannot simply be transposed. A measure within Article 35 must provide some specifi c disadvantage for ex-ports, by comparison with goods sold domestically, thereby encouraging domestic sales at the expense of export sales.

An example is Ravil , which concerned Italian rules on the sale of grated cheese. 102 The spe-cifi c cheese in question, ‘Grana Padano’, could only be sold under that name in grated form if it had been grated within the region of production. If it was exported whole, and grated abroad, the name could not be used. This rule was enforced by means of bilateral conventions with other states, and it was one such with France that was at the centre of the case. The Court found that this was an Article 35 MEQR because it treated cheese which had been transported across a border for grating differently from cheese which had been transported within the Grana

99 Case C-322/01 Deutscher Apothekerverband v DocMorris [2003] ECR I-14887. 100 Case C-531/07 Fachverband der Buch- und Medienwirtschaft, Judgment of 30 April 2009. 101 Case 15/79 Groenveld BV v Produktschap voor Vee en Vlees [1979] ECR 3409. 102 Case C-469/00 Ravil v Bellon Import [2003] ECR I-5053; see also Case C-388/95 Belgium v Spain [2000]

ECR I-3123.

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Padano region of Italy for grating, grating often being done not by the cheese producer but by the large retail fi rms who package and sell the grated cheese to consumers.

By contrast, Gybrechts concerned a rule which applied without distinction between domestic sale and exports yet which the Court nevertheless found to be within Article 35. 103 It had long been assumed that equally applicable rules were not within Article 35, as a result of comments in Groenveld and the result in that case. It is now clear that this assumption was mistaken. Even an equally applicable rule may, as a matter of fact, disadvantage exports relative to domestic sales, contrary to Article 35. 104

The rule in Gysbrechts prohibited those selling goods at a distance, for example by Internet, from requiring buyers to pay in advance or even to provide details of their payment card. Buyers were only required to pay once they had received the goods. This, of course, created a signifi cant risk of non-payment. However, it is far simpler and cheaper for a fi rm to pursue a domestic customer for payment than one abroad. Thus, this rule had a more discouraging effect on sales abroad than on domestic sales.

Case C-205/07 Gysbrechts , Judgment of 16 December 2008

40. In that regard, the Court has classifi ed as measures having equivalent effect to quantitative restrictions

on exports national measures which have as their specifi c object or effect the restriction of patterns

of exports and thereby the establishment of a difference in treatment between the domestic trade of

a Member State and its export trade in such a way as to provide a particular advantage for national

production or for the domestic market of the State in question, at the expense of the production or of

the trade of other Member States.

41. In the main proceedings, it is clear, as the Belgian Government has moreover noted in its written

observations, that the prohibition on requiring an advance payment deprives the traders concerned of

an effi cient tool with which to guard against the risk of non-payment. That is even more the case when

the national provision at issue is interpreted as prohibiting suppliers from requesting that consumers

provide their payment card number even if they undertake not to use it to collect payment before expiry

of the period for withdrawal.

42. As is clear from the order for reference, the consequences of such a prohibition are generally more

signifi cant in cross-border sales made directly to consumers, in particular, in sales made by means of

the Internet, by reason, inter alia, of the obstacles to bringing any legal proceedings in another Member

State against consumers who default, especially when the sales involve relatively small sums.

43. Consequently, even if a prohibition such as that at issue in the main proceedings is applicable to all

traders active in the national territory, its actual effect is nonetheless greater on goods leaving the

market of the exporting Member State than on the marketing of goods in the domestic market of that

Member State.

44. It must therefore be held that a national measure, such as that at issue in the main proceedings,

prohibiting a supplier in a distance sale from requiring an advance or any payment before expiry of the

period for withdrawal constitutes a measure having equivalent effect to a quantitative restriction on

exports. The same is true of a measure prohibiting a supplier from requiring that consumers provide

their payment card number, even if the supplier undertakes not to use it to collect payment before

expiry of the period for withdrawal.

103 Case C-205/07 Gysbrechts [2008] ECR I-9947. 104 A. Dawes , ‘ A Freedom Reborn? The New Yet Unclear Scope of Article 29 ’ ( 2009 ) 34 ELRev . 639 .

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Article 35 therefore applies to all national measures which tend to make export sales more diffi cult or burdensome than domestic sales, whether or not this is by direct discrimination or simply as a matter of fact. 105 However, as with Article 34, equally applicable measures hin-dering exports may in principle be permitted if they are necessary to meet some mandatory requirement and are proportionate. In Gysbrechts , the Court found the prohibition on advance payment to be justifi ed by consumer protection, while the prohibition on even asking for a payment card number was held to be disproportionate.

Finally, in Jersey Potatoes , the Court ruled that measures hindering the movement of pota-toes from Jersey to the United Kingdom were contrary to Article 35. 106 The oddity of the case is that Jersey is not an independent Member State, and free movement of goods law only applies to it via a Protocol as a result of its special ties with the United Kingdom. For the purposes of EU law, UK–Jersey trade is not cross-border. 107 However, the Court’s reasoning was that the potatoes sent to the United Kingdom might in some cases be exported on to other Member States. Extrapolating the reasoning it would seem that internal barriers to movement may fall within Article 35 where they may hinder export by, for example, making access to ports or roads more diffi cult. 108

105 See Case C-12/02 Grilli [2003] ECR I-11585. 106 Case C-293/02 Jersey Potatoes [2005] ECR I-9543. 107 See P. Oliver and S. Enchelmaier , ‘ Free Movement of Goods: Recent Developments in the Case Law ’ ( 2007 ) 44

CMLRev . 649 . 108 See similarly Joined Cases C-1/90 and C-176/90 Aragonesa [1991] ECR I-4151; Case C-72/03 Carbonati Apuani

[2004] ECR I-8027. See I. Kvesko , ‘ Is There Anything Left Outside the Reach of the European Court of Justice? ’ ( 2006 ) 33 LIEI 405 .

FURTHER READING

C. Barnard , ‘ Fitting the Remaining Pieces into the Goods and Persons Jigsaw ’ ( 2001 ) 26 European Law Review 35

S. Enchelmaier , ‘ The Awkward Selling of a Good Idea, or a Traditionalist Interpretation of Keck ’ ( 2003 ) 22 Yearbook of European Law 259

H.-C. von Heydebrand u.d. Lasa , ‘ Free Movement of Foodstuffs, Consumer Protection and Food Standards in the European Community: Has the Court got it Wrong? ’ ( 1991 ) 16 European Law Review 391

P. Oliver and S. Enchelmaier , ‘ Free Movement of Goods: Recent Developments in the Case Law ’ ( 2007 ) 44 Common Market Law Review 649

N. Reich , ‘ The “November Revolution” of the European Court of Justice: Keck, Meng and Audi Revisited ’ ( 1994 ) 31 Common Market Law Review 459

A. Tryfonidou , ‘ Was Keck a Half-baked Solution After All? ’ ( 2007 ) 34 Legal Issues of Economic Integration 167

S. Weatherill , ‘ After Keck: Some Thoughts on How to Clarify the Clarifi cation ’ ( 1996 ) 33 Common Market Law Review 885

‘ Recent Case Law Concerning the Free Movement of Goods: Mapping the Frontiers of Market Deregulation ’ ( 1999 ) 36 Common Market Law Review 51

J. Weiler, ‘ The Constitution of the Common Market Place: The Free Movement of Goods ’ in P. Craig and G. de Búrca (eds.), The Evolution of EU Law ( Oxford , Oxford University Press , 1999 ) 349

D. Wilsher , ‘ Does Keck Discrimination Make Any Sense? An Assessment of the Non-discrimination Principle within the European Single Market ’ ( 2008 ) 33 European Law Review 3

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