The Free Movement of Goods

Article 28(1) TFEU

“The Union shall comprise a customs union which shall cover all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having an equivalent effect, and the adoption of a common customs tariff in their relation to third countries.”

- What a customs union is, specifically to the European union

- Also notes externally, "adoption of a common customs tariff"

Article 30 TFEU

"Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States."

- Specific prohibition towards MS as agreed by MS

- Quid pro quo

Article 28 TFEU

'The Union shall comprise a customs union which shall cover all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries.'

“The […] shall also apply to products originating in [MS] and to products coming from third countries which are in free circulation in [MS].”

Applies to all products produced in member states but also goods that have circulated into the member states

Case 7/69, "Arts Treasures" Commission vs Italy

- defines "goods" with regards to customs duties and in the sense of article 28 TFEU

- Italy imposed a charge on the export of works of artistic value. Italy argued that arts treasures are not covered by the notion of goods in Article 28 TFEU

- The ECJ: (disagreeing with Italy) formulated a broad definition of "goods" to include:

"products which can be valued in money and which are capable of forming the subject of commercial transactions." - not in treaty provided by Court of Justice

As the works of art had a commercial value (Italy had even valued them for the purposes of imposing the export duty) they came within the scope of Article 28 TFEU.

Article 29 TFEU

"Products coming from a third country shall be considered to be in free circulation in a MS if the import formalities have been complied with and any customs duties or charges having equivalent effect which are payable have been levied in that MS and if they have not benefited from total or partial drawback of such duties or charges."

- If customs paid in one country for a good and it enters the EU it can be seen to have entered into free circulation in the EU and can now move freely, as if it was produced in the country that it entered into.

Defining charges have equivalent effect

24/68 'Statistical Levy' + 2&3/69 'Diamond Workers'

ECJ: "[...] any pecuniary charge, however small and whatever its designation and mode of application, which is imposed unilaterally on domestic or foreign goods by reason of the fact that they cross a frontier, and which is not a customs duty in the strict sense, constitutes a charge having equivalent effect [...]"

Statistical levy - money is raised to finance the exercise

Diamond workers - social care fund for diamond worker. Financed by diamonds paying into the fund. Private social fund.

[...] even if it is not imposed for the benefit of the State, is not discriminatory or protective in effect and if the product on which the charge is imposed is not in competition with any domestic product" (paragraph 9).

Exceptions for customs duties and CEEs

none

- No exceptions from the prohibition, no justifications such as public security, policy or health in the TFEU

- No public interest grounds based on case law of the ECJ

- Vs quantitative restrictions and MEEQRs

Article 110 TFEU

Internal taxation

- Prevents articles 28-30 from being undermined by discriminatory internal taxation

- Tax applies equally to domestic and non-domestic goods

- Internal taxation is (almost) entirely within the competence of the Member States

Pages 706-716 textbook = direct and indirect discrimination

Article 34 TFEU

"Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States"

'Conformity test' first step with problem question

Article 35 TFEU

"Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States."

Definition of quantitative restriction

Definition: 'Any measure of a MS that restrains the import, transit or export of a certain good [...] according to quantity or value' (Case 7/73, Geddo)

Specified examples of MEEQR

Art. 2 Council-Directive 70/50/EEC

- Minimum or maximum prices specified for imported products.

- Conditions in respect of packaging, composition, identification, size, weight, etc., which only apply to foreign goods.

- Limiting publicity in respect of imported goods as compared with domestic products.

Making it mandatory for importers of goods to have an agent in the importing MS.

Important directive in clearing up the definition, before the one provided by the Court of Justice

- Much longer list in this case

Procureur du Roi v Dassonville Case 8/74

Defining a MEEQR, and giving the framework to determine

All trading rules enacted by MS which are capable of hindering, directly or indirectly, actually or potentially, intra-community trade are to be considered as MEEQRs (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 in quantitative restrictions

In the absence of a community system guaranteeing for consumers the authenticity of a product's designation of origin, if a MS takes measures to prevent unfair practices in this connexion, 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 MS and should, in consequence, be accessible to all community nationals.(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. (shows the origin of the idea of Cassis de Dijon and the idea of 'rule of reason')

Dassonville formula

All trading rules enacted by Member States which are capable of hindering,

directly or indirectly,

actually or potentially,

intra-[Union] trade

are to be considered as measures having equivalent effect to quantitative restrictions.

Note the post-Cassis jurisprudence when answering. By the beginning of the 1990s Article 34 TFEU was almost a universal defence of companies against any State measure in another Member State affecting their trade activities there.

1993, in C-367-368/91, Keck the ECJ changed direction

Examples of Post-Cassis jurisprudence

- Case 286/86 Ministere Public v Deserbais [1988] - An importer of Edam cheese from Germany into France was prosecuted for unlaful use of a trade name (differing percentages of fat content to be referred to as Edam). Importer relied on Article 34 by way of defence to criminal prosecution. The ECJ held in accord with Cassis, that the French rule (higher percentage) was incompatible with Article 34 and could not be saved by the mandatory requirement

- Mirrors the result of Case 788/79 Italian State v Gilli and Andres [1980]. Imorters of apple vneager from Germany into Italy were prosecuted for fraud because they had solf vineager in Italy that was bot mde from fermentation of wine. The rule hampered Community trade and id not benefit from the mandatory requirements, since proper labelling could alert customers to the nature of the product, thereby avoiding consumer confusion.

- Same approach in Case 261/81 Walter Rau Lebensmittelwerke v de Smedt Pvba [1982] - concerned with national rules on packaging rather than content. Belgian law required all margarine to be marketed in cube-shaped packages irrespective of where it had been made, but it was clearly more difficult for non-Belgian manufacturers to comply without incurring cost increases. The ECJ held that Article 34 was applicable and that the Belgian rule could not be justified by consumer protection, since any consumer confusion could be avoided by clear labelling

Article 36 TFEU

“The provisions of Article 34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection or industrial and commercial property.”

- Prohibition is not absolute. Permits prohibitions (A34/35) if justified

- This list is exhaustive

- Objectives are non-economic

- Objectives have to be narrowly construed

- Measure has to be proportionate

- The Member State must not abuse the derogation (Article 36 sentence 2 TFEU).

- When applying this, 1) Establish violation of article 34 or 35 then 2) consider whether it can be justified under article 36

Justifications under Article 36 TFEU

- Public morality

- Public policy

- Public security

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

- Protection of national treasures possessing artistic, historic or archaeological value

- Protection of industrial and commercial property

Public morality cases

Case 34/79, Henn and Darby - Importing pornography. ECJ concludes that the overall purpose of UK law was to restrain pornography and that there was no lawful trade in such goods within the UK

Case 121/85, Conegate ("Rubber Dolls") p756-757 textbook

Conegate's UK defence fails. This distinction shows the ECJ's evaluation of whether the banned imported goods were treated were treated more harshly than similar domestic goods, as in Conegate it was determined that there was a lawful internal market for these goods

Public policy

Potentially broad but ECJ outlines strict interpretation in Case 177/83, Kohll.

Cannot be extended to objectives not mentioned therein

Case 231/83, Cullert v Centre Leclerc

French legislation imposed minimum retail prices for fuel fixed primarily on the basis of French ex-refinery prices and French refinery costs. France argued that in absence of the pricing rules there would be civil unrest.

Both ECJ and Avocat General agree The French legislation constitutes a MEEQR in the sense of Article 34 TFEU.

AG: If effective weapons of interest groups were accepted as justification, the existence of the four freedoms could no longer be relied upon (principle).

ECJ: F has not shown that changing the legislation would have consequences on law and order and that it would not have the resources to deal with it (facts).

The Advcaote General rejects the French argument on principle, but the ECJ appeared to accept that it could be pleaded under Article 36, whille rejecting it on the facts. The ECJ's approach might have been a more diplomatic way of disposing of the point, but the Advocate General is more convincing as a matter of principlpe. If interest-group pressure leading to potential violance could constitute justification under Article 36 then fundamental EU freedoms would be put in jeopardy (see page 758 for further discussion of serious disruption to public order)

Public security

Case 72/83, Campus Oil

Protection of health and life of humans, animals and plants

The ECJ will closely scrutinise the measure in order to determine whether the protection of public health is the real purpose behind the Member States’ action, or whether it was designed to protect domestic producers (Case 40/82, Poultry-Meat - banning turkey right before Christmas, environmental or to benefit UK turkey producers)

ECJ may have to determine if a public health claim is sustainable in circumstances where there is no perfect consensus on the scientific or medical evidence of particular substances (174/82, Sandoz Muesli bar sale in Netherlands with added vitamins on the grounds that these were dangerous to help, and there was no scientific evidence and limited EC legislation. ).

Case 174/82, Sandoz (Muesli Bars) Facts: Netherlands refused to allow the sale of muesli bars which contained added vitamins, on the ground that these were dangerous to health. There was no scientific evidence and only EC legislation that touched on the issue of food additives.

ECJ: Is the public health claim sustainable in principle? In the absence of EU law it is for the Member States to decide upon the appropriate degree of protection. Proportionality.

Case 120/78, Cassis de Dijon

- Mandatory requirements

- ECJ: “Obstacles to movement within the [Union] resulting from disparities between the national laws relating to the marketing of the products in question must be accepted in so far as those provisions may be recognised as being necessary in order to satisfy mandatory requirements relating in particular …”

“... the effectiveness of fiscal supervision,

the protection of public health,

the fairness of commercial transactions, and

the defence of the consumer.”

So Court of Justice will hold there was no violation of article 55 if the one of these mandatory requirements was met, and it was therefore for a good reason, thus permitting member states to take action under the Dassonville formula (beyond article 36) therefore making the measure legal under the treaty

- (8) 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 in so far as those provisions may be recognized as being necessary in order to satisfy mandatory requirements relating in particular to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defence of the consumer (not an exhaustive list)

The Court affirms and develops the Dassonville judgement. Eg. Affirms paragraph 5 of Dassonville: Article 34 could apply to national rules that did not discriminate against imported products but which inhibited trade because they were different from the trade rules in the country of origin

A principle of mutual recognition paragraph 14(4)

Cassis ruling builds on paragraph 6 of Dassonville in which the ECJ introduced the rule of reason: in the absence of harmonization, reasonable measures could be taken by a state to prevent unfair trade practices - para 8 of Cassis. Reasoning for para 8: ECJ affirms the right of states to regulate all matters that had not yet been the subject of Community harmonization HOWEVER the balance of this changes within the judgement → State regulation must be accepted, but only insofar as these trade rules could be justified by a mandatory requirement listed in para 8 - what began by an assertion of states’ rights was transformed into a conclusion that required the state to justify the indistinctly applicable rules under the rule of reason.

Overriding requirements in addition to those outlined by 'Cassis de Dijon':

- Protection of the Environment (Case 302/86, 'Danish Bottles')

- Preservation of the variety of the media (C-368/95, 'Familiapress').

- Peril to the financial balance of the social security system (C-120/95, 'Decker')

- Cohesion of the tax system (C-204/90, Bachmann)

- Prevention of unfair competition (C-34-36/95, De Agostini)

- Improvement of working conditions (Case 155/80, Oebel)

"Overriding requirements" are not a closed class/ not exhaustive: the Court may accept new grounds

The respective State measures have to be proportionate. Burden of proof on MS.

Why are overriding requirements recognised?

- Rule of reason, Recognition of equitable grounds deserve judicial protection pending EU legislation on the matter.

Eg. consumer protection

- Concrete manifestation of residual competence (OR determine whether the suspect measure falls within the scope of the free movement provisions in the first place.)

- General principle of EU law (Protection of the general interest in connection with the achievement of the freedoms)

Proportionality test (Cassis de Dijon outlines the respective State measures have to be proportionate)

- Suitability (of the measure for the attainment of the desired objective) Cases on this: C-240/95, Schmitt; Joined Cases 62/1-63/01, Seco.

- Necessity (of the measure. There is no less restrictive measure at the disposal of the MS). This is the element where many cases fail, the objective of the measure must not be capable of being achieved by alternative means that are less restrictive of intra-EU trade.

Cases 104/75, de Peijper, 272/80, Biologische Producten

- Proportionality strictu sensu of the measure (balance objective/restriction; cost-benefit analysis) Less used because in many cases it will be decided on a different stage/level

C-367-368/91, Keck + Mithouard

DEFINING A MEEQR

SELLING ARRANGEMENTS

K&M were prosecuted in France for selling goods at a price which was lower than their actual price (resale at a loss)), contrary to French law. The law did not ban sales at a loss by the manufacturer. K&M claimed that the French law was contrary to Community law concerning free movement of goods.

ECJ: "contrary to what has previously been decided" "certain selling arrangements" shall no longer be regarded as hindering State trade within the meaning of Dassonville, Court introduces concept of "selling arrangements" as not a violation of article 34 Important differentiation:

regulations re the characteristics of the goods are (still) covered by Article 34 TFEU

regulations re certain selling arrangements are (no longer) covered by Art. 34 as long as they:

apply equally to all traders

have the same effect on imported and domestic goods

Dual-burden rules vs equal-burden rules building on Cassis (pagraphs 15-17)

Rules concerning selling arrangements impose an equal burden on all those seeking to market goods in a particular territory (17). They did not impose extra costs on the importer, their purpose was not to regulate trade (12), and they did not prevent access to the market. They were therefore not within Article 34, provided that they affected in the same manner in law or fact domestic and imported goods (16)

"Certain selling arrangements"

Rules providing the compulsory closing of shops: Tankstation T’Heukske Joint Cases C-401-402/92. Supermarkets subject to compulsory closing hours vs petrol station 24/7 opening hours. This means selling arrangements here benefit the petrol stations

Limited ban on advertising concerning certain products or sectors Leclerc-Siplec C-412/93.

Ban on advertising of products typical for pharmacies outside pharmacies Hünermund C-292/92.

Regulations concerning the characteristics of the goods (distinguished from "certain selling arrangements")

Prohibition of a certain product classification: Clinique C-315/92

German Klinik menas hospital. German authorities want to be clear on the fact that buying this was not medical but a beauty product

Question is therefore, whether the name of the product is part of its sale promotion and is therefore a selling arrangement and thereby outside article 34, or is the name a characteristic of the goods

Courts note the importance of image, reputation in this sector is part of characteristics of the goods and is therefore covered by the Dassonville formula and the concept of a measure having equivalent effect to quantitative restrictions even after Keck

Obligation to stipulate certain data on the product: Commission v. Germany C-317/92.

Concerns the characteristics of the goods

C-368/95, Familiapress

5, Familiapress

Facts: Austrian law prohibited the publication of magazines with crossword puzzles for which the winners would receive prizes (because it is an advertising technique). Familiapress, an Austrian publisher, sought to restrain the Heinrich Bauer Verlag, a German publisher, from including such prize competitions in their publications.

Problem: Selling arrangement?

ECJ:“even though the relevant national legislation is directed against a method of sales promotion, in this case it bears on the actual content of the products, in so far as the competitions in question form an integral part of the magazine in which they appear.”

Post post-Cassis jurisprudence

https://www.uio.no/studier/emner/jus/jus/JUS5440/v13/undervisningsmateriale/post-cassis-case-law.pdf ?

Post-post Cassis jurisprudence

The ECJ does not differentiate between discriminatory measures on the one hand and non-discriminatory measures on the other hand.

The Court simply uses the notion of restraint (entrave, Beschränkung) of the free movement of goods (still applying Dassonville and Keck).

The Court accepts all mandatory requirements as justification for restraints.

The Court extended the spectrum of mandatory requirements.

The Court applies an autonomous interpretation of notions such as “consumer protection” disregarding national criteria.

The Court applies a strict proportionality test.

C-120/95, Decker

Facts: Mr Decker, resident of Luxembourg, had glasses made by an optician in Belgium and the bill sent to his Luxembourg health insurance. The insurance company refused to pay because the purchase “abroad” had not been permitted in advance

ECJ: considers this a restraint of the free movement of goods as the import of glasses was hindered. The argument of the Luxembourg government, that the financial balance of the national insurance system and therefore of the national health system of a small country would be disturbed [a mandatory requirement] was accepted as a possible justification. However, it did not apply in this case.

Court discusses this mandatory requirement despite it being discriminatory, like a justification, demonstrating this “jamming together”

However there does seem to be more recent case law which deviates from this