EU Law: Summaries on 'The Free Movement of Goods'

Introduction

What are Goods?

·      The word ‘goods’ does not have a legislative definition.

·      The ECJ defines goods very widely: “products which can be valued in money, and which are capable, as such, of forming the subject of commercial transactions” (Commission v Italy (Export Tax on Art Treasures)).

·      EU law applies to all goods originating in the EU itself, plus goods manufactured elsewhere but which are in “free circulation” in the EU (Donckerwolke).

1. prohibition of quantitative restrictions on imports: Article 34 TFEU

·      Article 34 TFEU prohibits Quantitative restrictions (QRs) on imports and all measures having equivalent effect (MEQRs).

·      Article 34 is directly effective (Ianelli & Volpi v Meroni).

·      A ‘quantitative restriction’ was defined by the ECJ in Geddo v Ente Nazionale Risi as a measure which amounts to “a total or partial restraint of, according to the circumstances, imports, exports or goods in transit”. This includes import bans: R v Henn & Darby; French Turkeys; Conegate; Rosengren.

·      The ECJ has defined MEQRs on imports very widely: “All trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade” (Dassonville).

·      Article 34 prohibits national rules applying only to imports (distinctly applicable measures) and those applying equally to domestic goods and imports (indistinctly applicable measures).

·      Examples of MEQRs on imports:

Ø Origin-marking of goods: Dassonville; Souvenir Jewellery; Commission v UK (Origin Marking)

Ø Buy-national campaigns: Buy Irish

Ø Import licences: Franzén

Ø Import inspections: Italian Table Wines

Ø Packaging requirements: Walter Rau v De Smedt; Mars

Ø Contents and Ingredients restrictions: Cassis de Dijon; Gilli & Andres; Beer Purity; Muller; Red Bull; Greenham & Abel

Ø Name restrictions: Deserbais; Smanor; Clinique; Commission v Spain (Chocolate)

Ø Authorisation requirements: Dynamic Medien; Herbal Products; ASCAFOR & ASIDAC; Fra.bo

Ø Prohibitions on the use of goods: Toolex Alpha; Tinted Film; Motorcycle Trailers; Mickelsson & Roos

Ø Prohibitions on advertising of goods: Gourmet International Products; Douwe Egberts

2. prohibition of QUANTITATIVE RESTRICTIONS ON EXPORTS: ARTICLE 35 TFEU

·      Article 35 TFEU prohibits Quantitative restrictions (QRs) on exports and all measures having equivalent effect (MEQRs).

·      Article 35 is directly effective (Pigs Marketing Board v Redmond).

·      ‘Quantitative restrictions’ on exports means export bans (R v Thompson & Others; Hedley Lomas; Dusseldorp).

·      With MEQRS on exports, there is no Dassonville formula, and a distinction is drawn between distinctly applicable measures and indistinctly applicable measures:

o   Distinctly applicable MEQRs on exports breach Article 35 unless justified (Bouhelier; Belgium v Spain; Jersey Potatoes).

o   Indistinctly applicable MEQRs on exports do not breach Article 35 unless they have as their “specific object or effect” the restriction of exports (Groenveld; Gysbrechts).

3. DEROGATION I: ARTICLE 36 TFEU

·      Article 36 TFEU applies to QRs and MEQRs on both imports and exports.

·      It allows Member States to justify measures that restrict imports or exports. It is a closed list.

·      When a Member State seeks to invoke Article 36, it must show (a) evidence that there is a risk (to morality, security, health, etc) and (b) that any restrictions are “proportionate” (ATRAL).

1. The Heads of Article 36 TFEU

 

v  Public Morality

·      This is something for Member States to decide in accordance with their own values (R v Henn & Darby).

v  Public Policy

·      Used in R v Thompson & Others and Ahokainen & Leppik.

v  Public Security

·      Invoked in Campus Oil. ‘Public security’ covers both internal and external security (Richardt).

v  Protection of Health

·      Human health is the most important derogation under Article 36 (Toolex Alpha).

·      Where justification is sought on health grounds, it “must be based on a detailed assessment of the risk to public health, based on the most reliable scientific data available and the most recent results of international research” (Greenham & Abel).

·      Flexibility is permitted in situations of “scientific uncertainty” (Sandoz).

2. The Second Sentence of Article 36 TFEU

‘Arbitrary Discrimination’

·      Even if a measure is covered by Article 36, it will still be unlawful if is arbitrary.

·      A ban on imports will be ‘arbitrary’ if there is already a lawful trade in very similar items in the importing State (Conegate).

‘A Disguised Restriction on Trade’

·      Member States must not use one of the heads of Article 36 as a “disguise” for some other reason, e.g. economic protectionism (French Turkeys).

4. DEROGATION II: CASSIS DE DIJON

In Cassis de Dijon, the Court introduced two key principles.

·         The “Rule of reason”: Member States may maintain or impose trade barriers where “necessary” to satisfy “mandatory requirements”.

·         The “Rule of mutual recognition”: a rebuttable presumption that goods lawfully sold in one Member State should be available in all others. Presumption rebutted in Muller because of differences in dietary habits between France and Germany.

·         Cassis principles apply to both Article 34 and 35 TFEU.

1. The “Mandatory Requirements”

v  Fairness of commercial transactions

·      Allows Member States to justify rules prohibiting “passing off” and other rules designed to tackle unfair commercial practices.

v  Consumer Protection

·      Often argued in packaging / ingredients cases, but will fail if consumers could be just as effectively protected by “proper” or “effective” labeling (Walter Rau; Beer Purity).

·      Whether the derogation succeeds depends on the “presumed expectations” of the “average… reasonably well-informed… reasonably observant and circumspect” consumer (Mars, Clinique, Estée Lauder).

·      This derogation is about protecting consumers, not promoting quality (Alfa Vita).

v  Protection of the Environment

·      Introduced in Danish Bottles. Allows Member States to justify rules on waste reduction (Danish Bottles); waste disposal (Walloon Waste; Dusseldorp); compulsory recycling (Radlberger & Spitz), noise pollution (Aher-Waggon; Mickelsson & Roos), etc.

v  Cultural Protection: recognised in Cinéthèque and Fachverband.

v  Protection of Fundamental Rights: Introduced in Schmidberger v Austria. “Fundamental rights” include freedom of expression and freedom of assembly.

v  Road Safety: See Tinted Film and Motorcycle Trailers.

v  The Protection of Children: See Dynamic Medien.

v  The Fight against Crime: See Tinted Film.

2. Application only to Indistinctly Applicable Measures?

·      Generally speaking, the “mandatory requirements” are limited to “indistinctly applicable” (i.e. non-discriminatory) measures (Gilli & Andres; Souvenir Jewellery).

·      However, there is an exception for “environmental protection” (Walloon Waste (import ban) and Dusseldorp (export ban)).

5. PROPORTIONALITY

·      All derogations are subject to a test of “proportionality”.

·      The test fails if there is a different method capable of achieving the same objective (e.g. health, consumer protection, environmental protection, etc) which is less restrictive of trade.

·      For example, in Walter Rau, a packaging requirement was “disproportionate” because its consumer protection objective could have been achieved just as effectively by clear labelling.

6. SELLING ARRANGEMENTS: KECK & MITHOUARD

·      In Keck & Mithouard, the Court held that “certain selling arrangements” did not, as a matter of law, “hinder trade between Member States”.

·      Selling arrangements are exempt from Article 34 TFEU.

1. Examples of “selling arrangements”

v  Restrictions on the Price at which goods are Sold

·      French legislation banning the sale of goods as a loss: Keck & Mithouard.

·      Austrian legislation setting minimum prices for books: Fachverband.

v  Restrictions on When Goods are Sold

·         Italian legislation prohibiting Sunday trading: Punto Casa & PPV.

·         Dutch legislation requiring petrol stations to close overnight: Tankstation t’Heukske.

v  Restrictions on Where Goods are Sold

·      Greek legislation providing that powdered milk for infants was only to be sold in pharmacists’ shops: Processed Milk.

·      Belgian legislation prohibiting the sale of newspaper and magazine subscriptions in the street: Burmanjer & Others.

·      Austrian legislation prohibiting door-to-door sales of jewellery: A-Punkt Schmuckhandels.

v  Restrictions on How Goods are Sold

·         Italian legislation requiring frozen bread to be sold wrapped, as this was a simple operation that could easily be performed by the retailer: Morellato.

·         Norwegian legislation banning the display of cigarettes in shops: Phillip Morris.

v  Restrictions on Who can sell or buy Goods

·         It is assumed that rules restricting the sale of goods except by those licensed to do so (e.g. alcohol) and rules restricting the purchase of goods to those over a certain age (e.g. alcohol, tobacco, pornography, petrol, etc.) would all amount to “selling arrangements”.

v  Partial advertising restrictions (e.g. no TV advertising)

·         German legislation banning TV advertising of pharmaceuticals:  Hünermund.

·         French legislation banning TV advertising of alcohol:  Leclerc-Siplec.

·         Swedish legislation banning adverts aimed at children: De Agostini & TV-Shop.

2. The Keck conditions

·         “Selling arrangements” must:

·         apply to all relevant traders

·         have the same effect, in law and in fact, on the marketing of domestic and imported goods

·         A total advertising ban breaches the second condition, because it has a greater impact (in fact) on the marketing of imported goods (Gourmet International Products, Douwe Egberts). A total advertising ban is an MEQR on imports.

·         A ban on mail-order / online sales also breaches the second Keck condition, because it has a greater impact (in fact) on the marketing of imported goods (Deutsche Apothekerverband; Ker-Optika). A ban on mail order / online sales is an MEQR on imports.

7. CUSTOMS AND EXCISE DUTIES

1.       prohibition of CUSTOMS DUTIES on imports and exports: Article 30 TFEU

·      Article 30 TFEU prohibits ‘Customs duties and equivalent charges’.

·      The best-known case is Van Gend en Loos.

·      Equivalent charges are defined very widely. All charges imposed on goods when they cross a national frontier, whether by the importing or exporting State, are prohibited (Sociaal Fonds).

·      The size, and the name, of the charge are immaterial (Sociaal Fonds).

·      It is irrelevant why a customs duty or equivalent charge has been imposed. It may have been for socially valid reasons (e.g. raising cash for disadvantaged workers) but this is immaterial (Sociaal Fonds; Kapniki Mikhailidis).

2.       INTERNAL TAXATION: ARTICLE 110 TFEU

·         Article 110 TFEU allows Members States to establish their own ‘internal taxation’ system. Taxes on goods – “excise duties” – are most frequently imposed on tobacco, alcohol, and fuel.

o   Article 110(1): Imported goods must not be taxed ‘in excess’ of the taxation imposed on ‘similar’ domestic products. ‘Similar’ products are “products which have similar characteristics and meet the same needs from the point of view of consumers” (Tax on Spirits). Hence, products do not have to be identical for Article 110(1) to apply.

o   Article 110(2): Where different products are in “competition” with each other, Member States may impose different excise duties but  the level of taxation imposed on imported products must not ‘afford indirect protection’ to domestic products .

·         Beer and wine are not ‘similar’ products, but they are at least in “competition” with each other (Commission v UK (Tax on Beer and Wine)). This means:

o   Because they are not ‘similar’ products, Article 110(1) does not apply and the products do not have to be taxed at the same rate.

o   However, because they are in competition with each other, Article 110(2) applies.

o   Therefore, the imported product (wine) must not be taxed at such a level as to confer ‘protection’ on the domestic product (beer). In practice this means that the UK government cannot tax (imported) wine at such a high level that the product becomes so prohibitively expensive that consumers switch to (domestic) beer instead.