Seminar 3: Quantitative Restrictions (Articles 34 & 35); Dassonville/Cassis/Keck/post-Keck

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1 Seminar 3: Quantitative Restrictions (Articles 34 & 35); Dassonville/Cassis/Keck/post-Keck Reading: Barnard Ch 4 (pp72-107); Ch5 (pp ) Treaty Provisions Article 34 direct effect Quantitative restrictions on imports and all measures having equivalent effect shall, without prejudice to the following provisions, be prohibited between Member States. NB: Articles have direct effect For Art 34 to apply need: Goods (already considered in last seminar) State measures Quantitative restrictions or measures having equivalent effect What are state measures? - All trade rules enacted by Member States Articles are concerned with state measures and include measures taken by a professional body which lays down the rules of ethics applicable; a company limited by guarantee charged with the task of organising a buy national campaign no need for them to be binding NB No de minimis rule even though strongly argued for by several Advocates General Commission v Ireland, (Buy Irish) Case 249/81, [1982] ECR 4005 (concerned a body set up by government to promote Irish goods) Apple and Pear Development Council v Lewis, Case 222/82, [1983] ECR 4083 (concerned a body which enjoyed public law privileges) R v Royal Pharmaceutical Society, Case 266/87, [1989] ECR 1295 Commission v Germany, Case C-325/00 [2002] ECR I-2039 (quality labels operated by non-governmental body) Commission v France, Case C-265/95 (Spanish strawberries) (concerned failure to act on part of the State to prevent actions of private parties) Schmidberger, Case C-112/00 [2003] ECR I-5659 (concerned positive obligation on the state to prevent private parties from obstructing free movement) What is a Quantitative Restriction (QR)? (not defined) Geddo, Case 2/73, [1973] ECR 865 Any measures which amount to a total or partial restraint of, according to the circumstances, imports, exports or goods in transit Henn & Darby, Case 34/79, [1979] ECR 3795 (HL) Article 267 Bluhme, Case C-67/97 [1998] ECR I-8033 (quota systems) 1

2 International Fruit Company, Cases 51-54/71 [1971] ECR 1107 (import/export licences) What is a Measure Having Equivalent Effect to a QR? Directive 70/50, (1970) OJ (Sp ed), IL/13/29 p 17 (distinct and indistinct applicable measures) no longer applicable but gave some useful examples of the kinds of measures which constitute a MEQRs. It divided measures into distinctly applicable rules (ie discriminate directly against imports Art 2(1)) - Article 2(2) defines in more detail conditions which if imposed are discriminatory (eg an inspection of imported meat or a condition that butter be in square packaging) indistinctly applicable rules of a dual burden type (Article 3 covers measures governing the marketing of products eg shape, size, weight, composition, presentation which are equally applicable to domestic and imported products where the restrictive effect of such measures on the free movement of goods exceeds the effects intrinsic to trade rules (ie disproportionate) indistinctly applicable rules of an equal burden type PHASE I: Dassonville Formula (definition of a measure having equivalent effect) - Dassonville, Case 8/74, [1974] ECR 837 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 equivalent effect to quantitative restrictions (intention irrelevant) The Dassonville Formula, Case 8/74, [1974] ECR 837 Facts: Criminal proceedings in Belgium were brought against a trader who acquired a consignment of Scotch whisky in free circulation in France, and imported it into Belgium without being in possession of a certificate of origin from the UK customs authorities. This was in violation of the Belgian customs requirements, the UK at the time not being part of the customs union. Dassonville prepared its own certificate of origin and was prosecuted for forgery Types of Measures (trading rules) (distinctly applicable measures caught by Art 34, but justified under Art 36 Import bans: Commission v UK (French Turkeys), Case 40/82, [1982] ECR 279; Commission v UK Case 124/81 (re UHT Milk); Henn & Darby (cited above) National marketing campaigns: Commission v Ireland (Buy Irish), Case 249/81, [1982] ECR 4005; cf Apple & Pear Case (see above) Inspections or border checks Case 35/76 Simmenthal [1976] ECR 1871 Price regulation (maximum and minimum prices) 2

3 Standards (technical specifications): Commission v Ireland (Dundalk Water Scheme), Case 45/87, [1988] ECR 4929 Origin markings: Commission v UK, Case 207/83 [1985] ECR 1201; Commission v Ireland, (Irish souvenirs) [1982] ECR 4005 Directly or indirectly, actually or potentially Concerned with the effect on trade Commission v France C-184/96 [1998] ECR I-6197 (foie gras) Types of Measures (trading rules) (indistinctly applicable measures caught by Article 34) Marketing rules: Cassis de Dijon (see below); Rau, Case 261/81 [1982] ECR 3961 (margarine case) PHASE II: Cassis de Dijon, Case 120/78, [1979] ECR 649 Principle of mutual recognition Rule of reason principle (mandatory requirements) Cassis de Dijon, Case 120/78, [1979] ECR 649 (indistinctly applicable) Facts: German law prohibited the marketing of liqueurs with an alcoholic strength of less than 25. This made it impossible for the plaintiff to import a consignment of Cassis de Dijon, a French liqueur with a strength of between 15 and 25, into Germany. The liqueur therefore could not compete with the stronger German one. No restrictions on the production and marketing of the weaker liqueur existed in France. Principle of mutual recognition: CJEU no valid reason why provided a product is lawfully marketed in one Member State it should not be introduced into any other Member State mutual recognition approach Mandatory Requirements (NB This whole section will be considered in detail in the next seminar) One exemption to the mutual recognition principle is where the disparities result from national provisions which are recognised as being necessary in order to satisfy certain mandatory requirements (rule of reason) (para. 8 of judgment) Non-exhaustive list (contrast with Article 36 derogations) - protection of public health - effectiveness of fiscal supervision - fairness of commercial transactions - defence of the consumer 3

4 Additions: (of matters of overriding public interest) Environment protection: Commission v Denmark, Case 302/86, [1988] ECR 4607 Cultural protection: Cinetheque, Joined Cases 60 & 61/84, [1985] ECR 2605 Fundamental rights: Schmidberger Case C-112/00 [2003] ECR I Improving working conditions: Oebel, Case 155/80, [1981] ECR 1993 (beyond the scope of Art 34 NB Where the defence is based on the Cassis rule of reason the genuineness of the justification as well as the proportionality of the measure will be closely assessed by CJEU in the light of the existing knowledge. See eg Commission v Germany (Beer purity laws), Case 178/84, [1987] ECR 1227 (consumer protection - content control) NB Member States free to apply higher standards for domestic goods marketed at home. PHASE III Post-Cassis case-law Post-Cassis Case Law Oebel, Case 155/80, [1981] ECR 1993 (outside scope of Art 34) Blesgen, Case 75/81, [1982] ECR 1211; [1983] 1 CMLR 431 (outside) Quietlynn, Case C-23/89, [1990] ECR I-3059; [1990] 3 CMLR 55 (outside) cf Buet, Case 382/87, [1989] ECR 1235 (within scope of Art 34 (ex-28) Oosthoek. Case 286/81, [1982] ECR 4575 (within scope) Torfaen v B&Q plc, Case 145/88, [1989] ECR 765(see esp AG Van Gerven) (within the scope) Stoke on Trent and Norwich City v B&Q, Case C-169/91, [1993] 1 All ER the proportionality principle (within the scope) PHASE IV: Cassis Retreat from the Lawfully Marketed Approach of Keck & Mithouard, Joined Cases C-267 & 268/91, [1993] ECRI-6097 (noted by Roth in (1994), CMLRev 845 and see also Moore listed above) Keck & Mithouard Cases, Cases /91, [1993] ECR I-6097 Facts: Criminal proceedings in France (prohibited to re-sell at a loss). Strasbourg Tribunale de Premier Instance. NB (1) No Community issue; (2) Justified. Shopping Centre Managers 4

5 Distortion of competition as law not applicable to manufacturers of products nor to traders outside France who have their place of business in frontier areas Article 34 not applicable effect on interstate trade hypothetical CJEU - increasing tendency of traders to invoke Article 34 as a means of challenging any rules whose effect is to limit their commercial freedom - upholds Cassis re regulations, laying down requirement to be met by goods (regulations re designation, form, size, weight) = MHEE even if applied without discrimination unless justified by public interest object - contrary to what has previously been decided certain selling arrangements shall no longer be regarded as hindering State trade within the meaning of Dassonville - 3 exceptions to new rule which would make Article 34 apply: a not legislation purpose to regulate trade between Member States b process not applicable to all affected traders within national territory c process which in law or fact, do not affect the manufacturing of imports and of domestic products in the same manner contrary to what has previously been decided, the application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements is not such as to hinder, directly or indirectly, actually or potentially, trade between Member States within the meaning of the Dassonville judgment provided that those provisions apply to all affected traders operating within the national territory and provided that they affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States. ie national laws restricting or prohibiting certain selling arrangements (ie those that govern where, when and by whom goods may be sold opening hours, advertising rules, prevention of resale at a loss) do not infringe Article 34 provided that the laws are not aimed at imports from other Member States and provided that they have the same effect on the commercial freedom to market domestic products as on imports. Thus equal burden arrangements appear to fall outside the scope of Article 34 no need to justify the proportionality principle: ie time & place where goods to be sold to consumers =selling arrangements In Keck the ECJ carved out an area of national regulation in which it will not intervene and over which the Union does not have power to regulate. However, it would seem clear from subsequent case law that the Keck approach is being constantly refined and revised but not abandoned altogether. Some case law since Keck has followed the approach of the CJEU in that decision (for instance Case C-292/92 Hünermund [1993] ECR I

6 However, the Keck ruling has been criticised. For instance, Advocate General Jacobs in his Opinion in Case C-412/93 Leclerc-Siplec [1995] ECR I-179 argued that the rigid distinctions introduced in the Keck case are inappropriate. He further argued that (re)introduction of a discrimination same application in law and in fact - in Keck was inappropriate since the central concern of the Treaty provisions on the free movement of goods should be to prevent unjustified obstacles to trade between Member States. For this reason, he argues, a market-access test would be more appropriate i.e. the key issue is whether the measure in question leads to a substantial hindrance to market access. Indeed, the CJEU appears more recently to have placed more emphasis on para. 17 of the Keck judgment, emphasising market access, and in effect turning this into the operative part of the test. In other words, measures would fall within the Article 34 TFEU prohibition if, even though indistinctly applicable, they were liable to impede the access of imports more than the access of domestic products: - Cases C-34-6/95 KO v De Agostini [1997] ECR I Case C-254/98 TK-Heimdienst Sass GmbH [2000] ECR I Case C-405/98 Gourmet [2001] ECR I Joined Cases C-158/04 & C-159/04 Alfa Vita Vassilopoulos [2006] ECR I Another problem with the Keck formula might lie in identifying the boundary between a selling arrangement and a product requirement - Case C-368/95 Familiapress - Case C-416/00 Morellato [2003] ECR I Case C-366/04 Schwarz [2006] ECR I In other cases the CJEU has used the argument of remoteness to justify noninterference with national measures. For instance in Dip SpA (Cases C-10 to 12/94) the CJEU held that the national measure in question had a restrictive effect that was too uncertain and too indirect for it to be regarded as hindering trade between Member States. On this point, also see Case C-44/98 BASF [[1999] ECR I However, these cases are unlikely to constitute a significant shift in the CJEU s approach to the scope of Article 34 TFEU in which access to markets is clearly impeded. It seems that only with the following three recent cases do we have any clarification of the situation post-keck. These cases appear to favour a pure market access test over the discrimination approach advocated in Keck. Case C-265/06 Commission v Portugal (tinted window film) [2008] ECR I-2245 Case C-110/05 Commission v Italy (motor cycle trailers) [2009] ECR I-519 Case C-142/05, Mickelsson & Roos 2009] ECR I-4273 Case C-639/11 Commission v Poland Case C-61/12 Commission v Lithuania 6

7 But note that each of these cases involved rules concerning the use of goods ie not really a product requirement or a selling arrangement! Can we then conclude that the CJEU s primary focus is on the importers ease of access to the markets of other Member States, rather than on whether the rule constitutes a particular type of trading measure (ie a selling arrangement or not)? Additional reading Oliver P Of trailers and Jet Skis: is the case law of Art 34 TFEU hurtling in a new direction? (2010) 33 Fordham Intl Law Journal 1423 Quantitative Restrictions on Exports and Measures Having Equivalent Effect Article 35 Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States Groenveld, Case 15/79, [1979] ECR 3409 (only applies to discriminatory measures) Bouhelier Case 53/76 [1977] ECR 197 BUT now see Case C-205/07 Gysbrechts CJEU extended scope of Art 35 to encompass indistinctly applicable measures (although it is not clear yet whether the CJEU intends to adopt a pure market access test which does not require discrimination as it has with import restrictions). 7