1. Free Movement of Goods
Lecture Two

2. 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

3. 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)

4. Article 30 (ex 36)
The provisions of Articles 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.

5. 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
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

6. 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”

7. 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

8. 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
Despite its potential breadth this derogation has been very narrowly construed by the Court of Justice and in fact has only been invoked successfully on one occasion.
In R v Thompson a restriction on the export of silver coins from the UK was justified on public policy grounds since the State had an interest in protecting the national mint. The purpose of the ban was to stop the coins from being melted down or destroyed. It should be noted that in addition to banning the export it was also a criminal offence within the UK to melt down the coins.

9. Public Security Case 72/83 Campus Oil Case C-367/89 Richardt
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

10. 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
The protection of health and life of humans, animals and plant is the derogation that is most frequently cited by Member states in an attempt to justify rules which prima facie breach Article 28.
Accordingly there is a considerable body of case law in relation to this derogation.
The Court of Justice has recognised that the protection of life and health ranks very high as a fundamental interest of the Member States and that accordingly the Member State has the right to determine the level of health protection for its citizens.
However where a Member State is seeking to rely on this derogation the Court will scrutinize the claims of the MS very carefully. Accordingly the ECJ will require Member States to prove that there is a genuine health risk and also whether the measure is part of a seriously considered health policy.

11. 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

12. 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
As stated in the previous slide, the ECJ will first consider whether there is a genuine health risk which has led to the Member State taking action.
This level of scrutiny can be seen in the case of Commission v UK Case 40/82
Here the UK introduced ban on poultry meat (chickens and turkeys) from most other MS. The UK argued in this infringement action that the ban was necessary in order to protect public health from the spread of Newcastle disease, a disease affecting poultry.
The ECJ rejected this claim. The evidence pointed to the fact that the UK had been under considerable pressure from domestic poultry producers to protect their interests, particularly in the months leading up to Christmas when high levels of poultry are consumed. Additionally the French had imposed controls to prevent Newcastle disease. The ECJ reached the conclusions that the UK was primarily motivated by commercial reasons rather than concerns about public health. Moreover there was no evidence of a seriously considered health policy because the there was little evidences of any research or studies into the disease.

13. 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”
Clearly there will be circumstances introduces a measure because it has concerns about a possible health risk.
In the Sandoz case the Dutch authorities prohibited the sale of muesli bars that contained added vitamins on the grounds that the added vitamins were dangerous to health. It should be noted that the muesli bars were in free circulation in Germany.
Although added vitamins may be good for health it was not clear at what point the excessive consumption of such vitamins could be harmful to health. There was no clear consensus on this point from the experts in the field.
Accordingly the ECJ said that the national rules were justified.

14. 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

15. 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 bio-diversity 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
UK required that all UHT milk imported into UK be subject to an import ban and rigorous
ECJ said that UK measures were too restrictive on trade- Member State could lay down standards that the milk would have to meet and even require a certificate confirming compliance with this standard.

16. 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)

17. Article 30 Conegate Ltd Case 121/85
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
This means that where a MS claims a measure is justified under one of the derogation's they must also prove that the measure does not constitute constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.
IN Conegate a British company had imported inflatable rubber dolls into the UK from Germany. A consignment of the rubber dolls was seized by the UK customs authorities.
The company sought recovery of the goods relying on Article 28. In turn the customs authorities sought to argue that the domestic rule prohibiting the import of these goods was justified under ART 30-public morality.
However ECJ ruled that UK could not rely on this derogation because, although the sale of such products was restricted in the UK to licenced sex shops and mail order companies, sales were not banned. Therefore to refuse importation of the German dolls was arbitrary discrimination.
In Commission v UK UHT

18. 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 intra-Community trade so much”
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 necessary-principle of proportionality

19. 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

20. 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

21. 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

22. 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”

23. 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

24. MANDATORY REQUIREMENTS
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’

25. 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

26. 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

27. Rule of Reason
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.

28. 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

29. 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”

30. 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

31. Walter Rau de Smedt 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

32. 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”.

33. 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”

34. 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”

35. 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

36. 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

37. 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’

38. 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

39. 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

40. 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

41. The diversity of the press
Familiapress v Bauer Verlag Case C-368/95
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

42. 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”

43. 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

44. Art 30 and the Rule of Reason
exhaustive
applies to all measures
narrowly interpreted
proportionality
Rule of Reason
extension of mandatory requirements
applies only to indistinctly applicable measures
proportionality

45. 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

46. 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

47. Equal burden rules
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)
Examples
Prohibition on night time deliveries, ban on Sunday trading, prohibition on door-to-door selling, ban on certain types of advertising

48. 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)

49. 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!

50. Keck & Mithouard 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”.

51. Keck ‘Product requirements’ ‘Certain selling arrangements’
“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’

52. 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”.

53. 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

54. 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)

55. Post Keck (Advertising)
Case C-292/92 Hünnermund
Case C-412/93 Leclerc-Siplec

56. 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”

57. 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

58. Dealing with problem questions...
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

59. Dealing with problem questions...
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)

60. 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.