Free Movement of Goods II: Non-fiscal Barriers

Question 1

What are the three main articles you need to remember for non-fiscal barriers?

Answer 1

Art 34 - imports
Art 35 - exports
Art 36 - exceptions (where EU law allows MSs to restrict free movement)

Question 2

Categorising the measure: what are the possibilities?

Answer 2

QR - quantitative restriction on imports
MEQR - measure having equivalent effect to a QR
SR - selling arrangement

Question 3

What are QRs?

Answer 3

Measures which amount to total or partial restraint of, according to the circs, imports, exports, or goods in transit
Includes bans and quotas. Will breach art 34 (imports) or art 35 (exports) unless the measure falls under art 36

Question 4

What are MEQRs? Main case to always start with?

What must you then make a distinction between?

Answer 4

Trading RULES enacted by MSs which are capable of hindering, directly or indirectly, actually or potentially, intra-community trade (Dassonville)

Dassonville
Scott whiskey importers, measure = to have a certificate of origin (time and cost). Was a distinctly discrim measure since applied differently to importers so was a restriction on the distributional channels for imported goods.
Court interpreted art 34 - said it has a BROAD scope. Look at the EFFECT of the measure, not its intention. So a measure can be indirectly discrim.
Judgment can be construed as a power-grab for the court since interpreted art 34 broadly, doesn’t require any evidence to show that the measure will impact Union trade, just talking about if it is CAPABLE of hindering Union trade (so future element)

Must draw a distinction between directly discrim measures (failing to apply equally to Dom producers and importers) and indistinctly discrim measures (they look like they’ve been applied properly but have a greater impact on importers)

Question 5

Give 5 examples of distinctly applicable MEQRs (covered by art 34).

Answer 5

DIMdolls: Dassonville, Irish x2, milk, Henn Darby dolls.

Dassonville
Restrictions on distribution channels for imported goods

UHT Milk
Imposing additional requirements on imported goods (had to be accompanied by a licence = non-fiscal measure which costs money to comply with)

Buy Irish (state campaign to buy Irish products)
Good example of the constant interaction between institutions - issue raised by traders, court rendered illegal, com tried to provide clarity for traders and MSs.
Domestic legislation may not crystallise consumers habits!

Irish Souvenirs (mandatory origin marking for souvenirs produced outside of Ireland)
Giving preference to domestic goods over imported goods
Didn't justify art 36 exception - consumer protection isn't mentioned in art 36!

Henn v Darby
Love dolls. Leg restriction imports of pornographic material.
Distinctly applicable MEQR within 34, but 36 applied to defend: public morality grounds (wasn’t for the court to define, so the leg was permitted to stay)
Shows there is scope for national differences.

Question 6

What are indistinctly applicable MEQRs? Main case to start with?
When will these fall outside the scope of art 34?

Answer 6

Measures which apply equally in law of in fact to imports and domestic goods but which have a greater impact on the imported products (Keck)

Keck
Nations, legislation prohibiting sale at a loss
AG delivered a second opinion on the case, so highlights its importance
Must make a distinction between product-related measures and selling arrangements.
Product related: about the content of the product, packaging, etc. In order to comply have to change the product itself.
Selling arrangement: about how, where and when the product is being sold. So have to change the circs under which the product is sold in order to comply.

Product-related : ask if falls within the Cassis defence
Selling arrangement: will fall outside the scope of art 34 on two conditions:
1. Applied to all domestic and imported products alike
2. Rules affect the imported and domestic products in the same manner - in law and in fact.

Question 7

Give two examples of product-related indistinctly applicable MEQRs. 2 cases to mention for the second measure heading.

Answer 7

Packaging and presentation regulations.

Regulation in beer purity laws
Beer purity case
Beer in Germany shouldn’t contain additives - v old German law.
Within art 34 since Belgian beer did contain additives
Cassis defence (public health grounds, consumer protection grounds) was rejected. Court said just needed appropriate labelling.

Cf.
Com v Denmark (re Beer cans)
Danish leg about marketing of beer.
Product-related indistinctly applicable measure. Within art 34
Cassis defence DID apply on grounds of environ protection.

Question 8

What was Cassis de Dijon about? When will the defence apply?

Answer 8

Fruit liqueur. Wanted to export into Germany, Germany wouldn’t allow as alcohol content not high enough.
Context: time of crisis and in the shadow of the lux compromise. Period of legislature stagnation, so court grabbed the power to make law (to defend measures and rule on measures’ legality)

Principle of mutual recognition established. Once a good has complied in one MS, it is effectively given a passport for the rest of the EU.

Defence to indistinctly applicable product-related measures (within art 34) only!
Defence = Mandatory requirements/ rule of reason: measures must be necessary to satisfy mandatory requirements of the state, e.g. Environ, culture, public health, consumer protection, fairness of commercial transactions, effectiveness of fiscal supervision
Measure must be NECESSARY and PROPORTIONATE to achieve the objective

So makes it easier for states to save indistinctly applicable measures.

Question 9

What is the implied presumption of the principle of mutual recognition?
What do mandatory requirements highlight about the nature of the EU?

Answer 9

Principle of mutual recognition creates a presumption of legality, so makes trading easier.

Mandatory requirements highlight the dynamic nature of the EU - allows for factors such as the interests of society, environ protection, consumer protection (this isn’t mentioned in art 36), so protects interests over time.
Can adapt to the changing states of nations and societies over time.

Question 10

For an MEQR selling arrangement to be saved what must it be?

Answer 10

Keck, Agostini, Gourmet
2 conditions:
1. Apply to all relevant traders operating within the national territory
2. Affect the marketing of domestic products and products from other MSs in the same manner, both in law and in fact.

In fact
Agostini
Swedish restriction on advertising targeting children (can’t target under 12), Agostini made toys. Measure more heavily penalised importers, so within art 34 (selling arrangement, didn’t apply to all producers in the same manner IN FACT). Court said for nat court to decide.

Gourmet
Alcohol advertising leg - can only advertise in alcohol trading magazines, applied to importers in a different manner IN FACT. Court said for nat court to decide.
Clarified what IN FACT means: ACCESS TO THE MARKET.

Question 11

What are the criticisms of Keck? Who made these criticisms?
What did these criticisms lead to?
What are the criticisms of this new approach?

Answer 11

AG Jacobs in Le-Clerc Siplec:
Makes things a lot simpler, but not very clear what selling arrangements are.
What does in law and in fact really mean? How can we tell if affects products in the same manner in fact?
Makes things easier but leads to results which have little logical structure. E.g. Familapress cf. Mars (these were product-related cassis defence cases!) use Sunday trading rules cases here!
Reasoning in the judgment not very clear. What does “certain” selling arrangements mean?
It is not clear which part of the previous judgment it is setting aside.

These criticisms led to the ‘market access approach” (Agostini and Gourmet - in fact means access to the market)
AG Jacobs is a fan of this approach.

SNELL is a critic of the market access approach - argues it should be dropped as a slogan. Should instead be about economic freedom and anti-protectionism. He says the true meaning of market access is unclear, so it is unhelpful as a slogan, wants to instead focus on discrimination and differential impact.

Question 12

Give 3 examples of selling arrangements which fell OUTSIDE Art 34.

Answer 12

1. Sunday trading rules = rules limiting opening hours
   Torfaen BC, Stoke on Trent v B+Q, Punto Casa.

Torfaen - restricted hours in UK, saved in the grounds of public interest.
Stoke on Trent
Punto Casa
Sunday trading arrangements were within Art 34, but seemed to be saved since the 2 Keck conditions (apply to both imported and som producers, apply in same manner in law and in fact) were satisfied.
We’re reducing the volume of sales for all, no-one could sell on a Sunday. So since they were deemed not discriminatory the court didn’t have to question whether the measures were nec or proportionate.

2. Selling at a loss (Keck)
3. Partial advertising bans

Question 13

Give 3 examples of where selling arrangements were caught by Art 34.

Answer 13

1. Prohibition on inclusion of crosswords in newspapers (Familapress)
   Had to change the product to comply, so product-related. Was it nec and proportionate (cassis) to ensure press diversity? Court said for national court to decide.
2. Prohibition on selling books below the recommended price levels
3. Outright ban on advertising (De Agostini, Gourmet)
   In fact means access to market. In both cases the court said it was for the national court to decide on.

Question 14

Which two cases would you use to contrast when looking at the Cassis defence?

Answer 14

Familapress and Mars
Familapress - crosswords, had to change product to comply, was it nec and proportionate to ensure press diversity? Court left it to the national court to decide.

Mars - German advertising rules, ad couldn’t cover more than 50% of bar as would confuse customers. Had to change product to comply.
Was it nec and proportionate for consumer protection? Court said no reasonably circumspect consumer would be fooled, so leg should be scrapped.
Court said it was fine to protect consumers, but if protecting anyone other than the reasonably circumspect consumer then it would imply measures of a discriminatory nature.
So the question is one of autonomy: at what level are states allowed to regulate the provision of goods?

Question 15

What are the two selling arrangement cases which involve pharmacies?

Answer 15

Hunermund and com v Greece.

Hunermund
Certain products couldn’t be sold in pharmacies and rules about advertising.
Selling arrangement, but satisfied two Keck conditions, so no need to worry about whether nec or proportionate.

Com v Greece
Required milk for infants to be sold only in pharmacies. Satisfied 2 Keck conditions so ok.

Question 16

Which case is about advertising? What are the points of law and the criticisms to note?

Answer 16

Siplec
French leg preventing advertising on TV for the fuel distribution sector.
AG Jacobs said Keck not helpful - advertising is crucial to make products a success and has nothing to do with whether the product tangible.
Under the Keck guidelines there should be nothing wrong with advertising since not impacting freedom of movement. AG Jacobs thinks this is wrong and thinks the product/selling arrangement distinction should be scrapped, should instead look at the measure’s impact - does it impede the freedom of movement of goods or not?

Question 17

Which two cases would you use to highlight measures restricting the USE of products?

Answer 17

Com v Italy (trailers)
Italian leg prohibiting the towing of things by motorcycles (road safety reasoning)
Restrictions weren’t based on sale but in USE of the product.
The court extended art 34 to cover this - asked whether it was nec and proportionate for road safety for the leg to be in place. Left for the national court to decide (since an inherently subjective matter)

Michelson and Roos (Jetskis) 2009
Caught by art 34 where have restrictions based on the use of the product.

Question 18

Which case looked like a fiscal measure but was in fact a non-fiscal measure? What was the outcome?

Answer 18

Scott Whiskey Case 2014
Scottish legislation on the minimum pricing of alcohol. Said it wasn’t a tax, it was a FORMULA for the producers to apply. So not a fiscal measure, it was a product-related measure (have to change the product or its price to comply)!
Court said the measure was capable of indirectly hindering trade since made it impossible for importers to reflect the price of alcohol in Scotland.

Cassis defence. Was it nec and proportionate on health grounds? Was for AG of Scotland to decide.
Could the same be achieved by imposing a tax? Probably.

A reference was made concerning the scientific uncertainty as to alcohol’s affect on a person (could link to tobacco directives).

Question 19

When looking to see if a measure is justifiable which procedures would you use and when?

Answer 19

Directly applicable discrim measures - use Art 36
E.g. Public morality (Henn v Darby), public policy, public security, protection of health, humans,mol ants, animals, protection of national treasures, protection of industrial and commercial property
Have to ask if NEC and PROPORTIONATE.
So art 36 doesn’t apply to disguised restrictions.

For indistinctly applicable MEQRs - use Cassis defence

For selling arrangements - have to ask if the 2 Keck conditions have been satisfied.

For measure affecting the use of the product - it is a question of necessity and proportionality.

Question 20

Which two things are balanced against each other in the Cassis defence?
What other question must you also ask for this defence to apply?

Answer 20

The principle of mutual recognition is balanced against mandatory requirements (rule of reason)

Principle of mutual recognition
Goods in lawful circulation in one MS are presumed to be marketable in all other MSs. The burden of proof is on the MS seeking to block the sale of goods to prove otherwise.

Mandatory requirements
The measure must be necessary to satisfy the mandatory reqs of the MS.
Includes environment, culture, public health, consumer protection, fairness of commercial transactions, effectiveness of fiscal supervision.

Must also ask if measure is NEC and PROPORTIONATE to achieving the objective.

Question 21

Give 4 examples of the Cassis defence applying.

Answer 21

Familapress (press diversity) cf Mars (consumer protection)

Com v Denmark (re beer cans)
Was ok on grounds on environ

Cinetheque
Ban on release of film until 1 year after release. (Was deemed a product-related measure?) Saved by cassis defence on grounds of culture.

Question 22

Is Art 34 horizontally directly effective? 3 cases to mention.

Answer 22

Goods - we don’t know, there is no case law
Services - yes (not a safe yes though)

Apples and Pears (can use Spanish strawberries case on this point too)
This was a case of vertical direct effect (board was funded by the state to promote apples and pears)

Frabo 2012
Private individual - looks like horizontal action.
Body’s job was to certify certain products are legal and in compliance with German regulation. So it was a state-related function, so this isn’t a safe basis on which to assume that Art 34 can be invoked against private producers.

Question 23

Outline IP briefly. 5 cases to mention.

Answer 23

Principle of exhaustion (Centrafarm) states that once a product is on sale in a market the IP rights holder’s right is said to have been exhausted.
The rights holder has the right to first sale.
Idea: don’t want to allow rights holders to compartmentalise markets, otherwise would get a separation of the markets which would restrict freedom of movement.

Can restrict parallel imports if no economic link (Ideal Standard) so if they have a licence you can’t block, if they don’t have a licence you can block.

Can block if there is a risk of confusion (Terrapin), e.g. Similar TMs.
Can block if repackaged (Hoffman la Roche)

A producer can be said to have impliedly consented to parallel imports, but this will be construed narrowly by the courts (Davidoff and Levi Strauss).
Sold to US but didn’t say ‘don’t sell them back’ so were said to have impliedly consented to parallel imports (here were parallel imports from outside the union).

Question 24

Outline the steps to take in a problem question (a summary of this topic!).

Answer 24

Is the measure capable of hindering intra-Union trade? (Dassonville)
Where does the measure apply? Is it directly discriminatory? Will be within art 34 if so, then have to ask if art 36 excepts it.
If indistinctly applicable measure need to distinguish between product related measures (cassis defence could apply, mutual recognition vs rule of reason/mandatory reqs, nec and proportionate) or selling arrangement (have to ask whether the two Keck conditions have been satisfied to evade net of art 34 - applies to dome and im? Applies in same manner in law and in fact. In fact means access to market - Gourmet)
If about the use of the product then it will be a question of necessity and proportionality.