Free Movement of Goods
Lecture Two
Lecture Aims
• To examine the EC rules in relation to the exceptions
to the free movement of goods
• To understand the circumstances in which a Member
State may derogate from Article 28 and thus ‘lawfully’
introduce measures which hinder trade
• To examine the Treaty provisions and case law in
relation to this topic
Lecture content
– Article 30 derogations by which a breach of
Article 28 is justified
– The development, by the ECJ, of the ‘rule
of reason’ in which certain national rules
which hinder trade are ‘acceptable’
(Cassis de Dijon)
– The limitation of the Dassonville ruling in
relation to certain ‘selling arrangements’
(Keck)
Article 30 (ex 36)
• The provisions of Articles 28-29 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 of industrial and commercial
property. Such prohibition or restrictions shall not,
however, constitute a means of arbitrary discrimination or
a disguised restriction on trade between Member States.
Article 30 (ex 36)
• Six derogations
• Exhaustive list (Commission v Italy Case 95/81)
• ECJ placed restrictive (strict) interpretation on these exceptions
to the fundamental freedom of goods
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public morality
public policy
public security
protection of health and life of humans, animals or plants
protection of national treasures
protection of industrial and commercial property
Public Morality
• Case 34/79 R v Henn & Darby
– Ban on import of pornographic material into
UK
– Ban was justified under Article 30
– “..it is for each Member State to determine in accordance
with its own scale of values …of public morality in its
territory”
Public Morality
• Case 121/85 Conegate
– UK could not rely on Article 30 public morality
defence because it did not adopt the same
sanctions or preventive measures in respect of
the same domestically manufactured goods
Public Policy
• Very narrowly construed by ECJ
• Only one example where this has been
successfully invoked
– R v Thompson Case 7/78
– “the need to protect the mint coinage which is traditionally
regarded as involving the fundamental interests of the state”
– Cullet Case 231/83
Public Security
• Case 72/83 Campus Oil
• Irish rules justified in order to protect domestic
energy production in order to ensure national
security
• Case C-367/89 Richardt
• rules relating to transport of certain strategic
goods which could effect public security of the
state
Protection of health and life of
humans animals or plants
• Most frequently cited defence
• Ranks high as a fundamental interest of
all Member States
• ECJ will carefully consider whether
– Whether there is a real health risk
(Commission v UK Case 40/82)
– Whether there is a seriously considered
health policy
Protection of health and life of
humans animals or plants
• Case 4/75 Rewe- Zentralfinanz
– German rules requiring inspection of imported
apples
– To control spread of pest
– Held that the risk of pest spreading was real
– The inspection was a MEQR but justified because
inspection was necessary to protect domestic
apples
Protection of health and life of
humans animals or plants
• Is there a real health risk?
• Commission v UK Case 40/82 (Poultry
case)
– UK ban on imported poultry
– UK attempt to argue public health derogation
– Rejected by ECJ-measure not introduced to
address a genuine health risk
– Disguised restriction on trade
Protection of health and life of
humans animals or plants
• What if the scientific evidence is uncertain?
• Case 174/82 Sandoz
– “in so far as there are uncertainties at the present
state of scientific research it is for the Member
States, in the absence of harmonization, to decide
what degree of protection of the health and life of
humans they intend to assure, having regard
however for the requirements of the free
movements of goods”
Protection of health and life of
humans animals or plants
• Case C-192/01 Commission v Denmark
– ECJ confirms view in Sandoz
– Member States must examine the scientific evidence
– if uncertainty remains Member States can rely on the
precautionary principle
– not necessary to wait for conclusive scientific
evidence before a Member State addresses a
potential risk
Protection of health and life of
humans animals or plants
• Not limited to life and health of humans-includes
animals and plants
– Bluhme Case C-67/97
– measures aimed at preserving the indigenous animal population
with distinct characteristics contributed to the maintenance of biodiversity by ensuring the survival of the species
• Not limited to food and drink products
– Toolex Alpha Case ??
– Swedish law banned use of certain chemicals-necessary to protect
health
Article 30
• Protection of national treasures - see
Case 7/68 Commission v Italy
• Protection of industrial and commercial
property-concerned with intellectual
property rights (copyright, patents etc)
Article 30
• Such prohibition or restrictions shall not, however,
constitute a means of arbitrary discrimination or a
disguised restriction on trade between Member States.
• Conegate Ltd Case 121/85
• Commission v UK (Poultry case) Case
40/82
ARTICLE 30 ( ex 36)
• De Peijper Case 104/75
– “…national rules or practices which do restrict imports…are only
compatible with the Treaty to the extent to which they are
necessary…National rules or practices do not fall within the
exemptions specified in [Article30] if[their objectives] can as
effectively be protected by measures which do not restrict intraCommunity trade so much”
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ECJ consistently held that the purpose of Art 30 is to allow certain national
rules to derogate from Article 20 only to the extent to which they are
‘justified’
– measures must be ‘justified’-a measure is justified if it does what is
necessary to achieve the objective but it does no more than is necessaryprinciple of proportionality
Summary
• Article 28 prohibits QRs and MEQRs
• The Dassonville formula for defining MEQRs is so
widely stated that it covers a wide range of measures
which have been introduced by Member states in
order to serve some important public interest
• No all these ‘public interests’ are provided for by the
limited Article 30 derogations
• Therefore many ‘sensible’ measures are prima facie
in breach of Article 28 unless they can be justified
under Article 30
The Rule of Reason
• Established in the landmark decision in
Cassis de Dijon, case 120/78
• Essentially certain national rules, which
create obstacles to trade will (despite the fact
that they create obstacles to trade) be
acceptable provided they satisfy the criteria
laid down by the ECJ in this decision
Cassis de Dijon
• Case 120/78 Rewe Zentrale v
Bundesmonopolverwaltung für
Branntwein –
• Cassis de Dijon
• Rewe Zentral-German importers
• Seeking to import Cassis de Dijon (French
blackcurrant liqueur with alcohol content of 15-20%)
• Unable to import into Germany because of German
laws requiring a minimum alcohol content
The Rule of Reason
“In the absence of common rules relating to the production
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 in so far
as those provisions may be recognised as being necessary 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”
Cassis de Dijon
• Obstacles to movement within the
Community resulting from disparities
between national laws must be
accepted if the national laws are:
• necessary
• to satisfy mandatory requirements
• only operates in the absence of
harmonising Community law
MANDATORY
REQUIREMENTS
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The effectiveness of fiscal supervision
protection of health
fairness of commercial transactions
defence of the consumer
– NB also known as ‘imperative
requirements or overriding requirements in
the public interest’
Cassis de Dijon
• Re arguments of German government
– Public health-rejects this on the basis that
consumers could in fact buy drinks with
lower alcohol levels and they could also
dilute the stronger alcohol!
– Consumer protection –ECJ rejects this.
The matter can be dealt with by
appropriate labelling of the products
depicting the alcohol levels
Cassis de Dijon
• It is also necessary for such rules to be
proportionate to the aim in view
• If a Member State has a choice
between various measures to attain the
same objective it should choose the
means which least restricts the free
movement of goods
Rule of Reason
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Only operates to ‘save’ national rules where the Member States has
been able to act because of the absence of any Community
harmonising measures
Where Community has adopted such harmonising measures Member
states must comply with the Community norm and are not free to
regulate such matters
– “In the absence of common rules relating to the production 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.
Rule of reason
• Only operates in favour of national rules
which are indistinctly applicable
– Commission v Ireland (Irish Souvenirs) Case 113/80
– Gilli & Andres Case 788/79
• Distinctly applicable rules may be justified
under Article 30 but are not acceptable under
the rule of reason
Cassis de Dijon
• Principle of mutual recognition– ”there is therefore no valid reason why,
provided that they [goods] have been
lawfully produced and marketed in one of
the Member States, alcoholic beverages
should not be introduced into any other
Member State”
Cassis de Dijon
• Principle of mutual recognition applies
• Can be rebutted by a Member State if
MS can prove that its national rules falls
within the rule of reason
• And that the national rule is
proportionate
• And that the rule is indistinctly
applicable
Walter Rau de Smedt
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Case 261/81
Legislation governing shape of margarine packaging
Introduced to ‘aid’ consumers distinguish products
ECJ accepts that the aim of protecting consumers is
justified
• BUT the requirement to use only one specified type
of packaging was too restrictive (disproportionate)
• ECJ- labelling could achieve the same ends
Commission v Germany
(beer purity laws)
• Case 178/84
• German legislation prohibiting use of certain products in ‘Bier’
(such as maize and rice)
• German argument that German consumer associates ‘Bier’ as a
product without these additives
• ECJ- stated that this requirement was disproportionate.
Consumers could still be protected 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 affixing of suitable
labels giving the nature of the product sold”.
Clinique & Estée Lauder
• Case C-German legislation prohibiting use of certain
misleading terms on cosmetic products
• Estée Lauder had to rename the brand ‘Linique’
• Rule challenged by EL in German courts
• ECJ held the rules were not necessary as consumers
in other MSs did not get confused by the name and
the products were sold in cosmetic shops and not
pharmacies
– “It is necessary to take into account the presumed
expectations of an average consumer who is reasonably well
informed and reasonably observant and circumspect”
Consumer protection
• See also Case C-470/93 Mars
• + 10% flash on the packaging
• “reasonably circumspect consumers could be
deemed to know that there was not necessarily a link
between the size of the publicity markings relating to
an increase in a product’s quantity and the size of
that increase”
Consumer protection
• Case Commission v Spain & Italy
• Ban on use of the word chocolate for
chocolate products containing chocolate fats
• Spain & Italy advance consumer protection
arguments
• Rejected by ECJ-the measure was to
restrictive on intra -Community trade
• Less restrictive measures would be to have
ingredients labeling
Public health mandatory
requirement
• Commission v Germany Case 178/84
• Ban on use of all additives in beer
• German government argued ban was necessary because
Germans drank so much beer and long term effects of additives
not certain
• ECJ scrutinises such claims very carefully
– international scientific research
– World Health Organisation
– Also the additives were permitted in other drinks so German claims
inconsistent
Further developments
• In Cassis de Dijon -four mandatory
requirements
• These have since been extended in
subsequent case law
• The list of mandatory requirements is not
exhaustive (unlike Art 30 derogations)
• sometimes referred to as ‘imperative
requirements’ or ‘overriding requirements in
the public interest’
MANDATORY
REQUIREMENTS
• protection of the environment
• improvement of working conditions (Case
155/80 Oebel)
• protection of cultural and socio-cultural
characteristics
• maintenance of press diversity
• prevention of fraud
• The protection of fundamental rights
The protection of cultural and
socio-cultural characteristics
• Cinéthèque Cases 60 & 61/84
• French legislation
• prohibited selling/hiring of videos within 12
months of release of a film
• law challenged by Cinéthèque
• Rules prima facie breach Art 28 (MEQR)ECJ
held law was acceptable because necessary to
protect the cinema as a means of cultural
expression
The protection of the environment
• Added in Commission v Denmark
Case 302/86
• Danish bottles case
• Measures aimed at protecting Danish
environment
• Stringent application of the proportionality test
• not all elements of Danish rules satisfy the
proportionality requirement
The diversity of the press
• Familiapress v Bauer Verlag Case C-368/95
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preliminary ruling from Austrian court
Austrian legislation prohibiting inclusion of prize competitions/draws in
magazines
Austrian newspaper sought to prevent a German publisher from selling
a magazine (with a cash prize crossword ) into Austria
The Austrian ‘ban’ was MEQR
Held that ban was necessary to secure the diversity of the press by
helping smaller publishers to ‘survive’
Link to ECHR-press diversity helps to safeguard freedom of expression
The protection of fundamental
rights
• Schmidberger v Austria Case C-112/00
– “ Since both the Community and its Member
States are required to respect fundamental rights
[including freedom of expression and freedom of
assembly, guaranteed by Articles 10 and 11 of the
European Convention of Human Rights], the
protection of those rights is a legitimate interest
which, in principle, justifies a restriction of …the
free movement of goods”
Summary-Rule of Reason
• ONLY operates in absence of
Community harmonising legislation
• ONLY applies to national rules which
are indistinctly applicable
• AND the national rules must be
proportionate
• The list of mandatory requirements is
not exhaustive
Art 30 and the Rule of
Reason
• Art 30
• exhaustive
• applies to all
measures
• narrowly interpreted
• proportionality
• Rule of Reason
• extension of
mandatory
requirements
• applies only to
indistinctly
applicable measures
• proportionality
Dassonville formula
• So widely stated
• catches ‘all trading rules’ which are capable of hindering
trade, actually or potentially, directly or indirectly
• many examples of rules which have fallen within this
widely stated formula
• many such rules are not designed to be protectionist
• rules have been classified as
– equal burden rules
– dual burden rules
Equal burden rules and dual
burden rules
• Dual burden rules- where
goods comply with the
standards of the state in
which they are made and
then have to comply with the
standard in the ‘host’ state
(in short two sets of rules)
• such dual burden rules are
incompatible with Article 28
unless they can be saved by
the mandatory requirements
(or justified under Article30)
• equal burden rules -rules
which apply to all goods
irrespective of origin, which
regulate trade in some way,
but they do not have a
protectionist effect (also
referred to as market
circumstances rules)
• Such rules may have an
impact on the overall volume
of trade, but the impact is
equal as between the sale of
domestic goods and
imported good
Equal burden rules
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Although such rules restrict the overall volume of trade
they are not designed to protect the domestic market
they do not have the effect of protecting the domestic market
the effect imported goods and domestic goods in the same
way in both law and in fact
– Classically market circumstances rules are equal burden
rules- (who,where and when)
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Examples
– Prohibition on night time deliveries, ban on Sunday trading,
prohibition on door-to-door selling, ban on certain types of
advertising
Equal burden rules
• ECJ not consistent
• In some cases ECJ held that equal burden rules did
not fall within the scope of Article 28– (Case 155/80 Oebel -rule prohibiting delivery of
bread during the night)
• In other cases the ECK held such rules did fall within
the scope of Article 28 but were justifiable under the
rule of reason
– (Case 268/81 Oosthoek)
Equal burden rules
• Case 145/88 Torfaen Borough Council v B & P plc
(Sunday Trading case)
– Rules prohibiting Sunday opening
– Rule was equal burden - reduced sales but imported goods
and domestic goods in the same position
– ECJ held it was prima facie caught by Article 28
– but could be saved by the mandatory requirement of
‘national, regional or socio-cultural characteristics
– However ECJ left it to national courts to decide whether the
ban was necessary to achieve its aim
– Resulted in different national courts reaching different
conclusions about the same national legislation!
Keck & Mithouard
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Joined Cases C-267 & 268/91
K & M sold goods at a loss
French law banned the selling of goods at a loss so K & M prosecuted
K & M argued (by way of defence) that the French law breached Art 28 by
because it restricted the volume of sales of imported goods (preliminary
ruling sought)
ECJ disagreed
ECK stated that the French law was not intended to regulate trade in
goods, even though the legislation could result in a drop in the volume of
sales (of all goods)
ECJ also expressed concern about the way traders kept using Art 28 to
challenge any rules which limited their commercial freedom
Therefore ECK said it was necessary to “re-examine and clarify its case law
on this matter”.
Keck
• ‘Product
requirements’
• “those relating to
designation, form, size,
weight, composition,
presentation, labelling,
packaging”
• such rules constitute
MEQRS but may be justified
under Article 30 or
acceptable under rule of
reason
• ‘Certain selling
arrangements’
• Developed a ‘new
set of rules’
KECK
• “contrary to what has already 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 trade directly or
indirectly, actually or potentially, trade between Member
States within the meaning of the Dassonville
judgment…provided 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 goods and those from other
Member States”.
Keck-conditions
• Certain selling arrangements will not fall
within the Dassonville formula if they affect all
relevant traders operating within the national
territory in the same manner
– same manner both in law and in fact (equal burden rules)
– where such conditions are fulfilled such rules do not
prevent/impede access of imported goods
– such rules do not breach Article 28
– In short certain selling arrangements do not fall within the
Dassonville formula
Certain selling arrangements?
• Cases C-401/& 402/92 Tankstation ’t
Heukste vof & J.B>E. Boermans(rules
requiring retail outlets to close during night)
• Case C-391/92 Commission v Greece (baby
milk only to be sold in pharmacists’ shops)
• Cases C-69 & 258/93 Punto Casa (Sunday
trading rules)
Post Keck (Advertising)
• Case C-292/92 Hünnermund
• Case C-412/93 Leclerc-Siplec
Post Keck (Advertising)
• Case C34-36/95 De Agostini & TV Shop
– “Consequently an outright ban on advertising aimed at children less than 12
years of age...is not covered by Article 28 of the Treaty, unless it is shown
that that the ban does not affect in the same way, in fact and in law, the
marketing of national products and of products from other Member States.”
• Case C-405/98 Gourmet International Products
– “if national provisions restricting or prohibiting certain selling arrangements
are to avoid being caught by Article 28...they must not be of such a kind as
to prevent access to the market by products from another Member State or
to impede access any more than they impede the access of domestic
products.”
– “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 o products from other Member States”
If the rule does not fulfil Keck
conditions
• If the ‘selling arrangement’ does not fulfil the Keck
criteria (if it affects imported products in a different
manner)
• then the rule will fall within the scope of Art 28 (it will
be a MEQR)
• the selling arrangement rule may be justified under
Art 30 or satisfy requirements of rule of reason
Dealing with problem questions...
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Is the measure a Selling Arrangement?
Yes-then apply the conditions in Keck
(does the measure apply equally in law and in fact?)
If the measure fulfills the Keck conditions then the
measure does not breach Article 28
• If the measure does not fulfill the Keck conditions
then it will be a MEQR
Dealing with problem questions...
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Is the measure a MEQR? (Dassonville formula)
Yes-then prima facie in breach of Article 28
Is the rule distinctly applicable?
If yes then it can only ever be justified by reference to
Article 30
• Is the rule indistinctly applicable?
• If yes then rule may be justified under either Article 30 or
under the rule of reason
• If rule is justified under Article 30 or acceptable under the
rule of reason it does not breach Article 28 (proportionality
test)
Conclusion
• There are limits to the free movement of goods
• Certain national rules may breach Article 28 but such
breaches may be justified under Article 30 or the
national rules may satisfy the requirements of the rule
of reason
• Certain rules are classified as selling arrangements
and provided they meet the equal burden test laid
down in Keck, such rules will not fall within the scope
of article 28.