DEROGATIONS AND JUSTIFICATIONS 
FOR INDISTINCTLY APPLICABLE MEASURES

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All Trading Rules - Case

Commission v Ireland (Buy Irish) [1982] – the court said that a campaign sponsored by the Irish government encouraging its citizens to buy Irish products amounted to the establishment of a “national practice introduced by the Irish government and prosecuted with its assistance”. It continued to say that by influencing conduct of traders and consumers in Ireland the campaign’s potential effect on imports was comparable to that resulting from Governments measures of a binding nature (this was due to the clear economical link between the Government and the Campaign) and so the term Rules/Measures includes practices and policies.

Commission v France (Postal Franking Machines) [1985] – rules/measures include administrative regulations and action which show a “certain degree of consistency and generality”. 

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Directly or Indirectly, Actually or Potentially

In Dassonville, a Belgian Law required importers to have a certificate of authenticity from Scotland for Scotch whiskey. This was held to be an MEE as indirect importers (those who got the whiskey already in circulation in other member states) would not be able to acquire such a certificate. In Foie Gras [1987] even though 99% of FG was produced in France, French Laws about its composition could potentially hinder market access IF someone started a new company elsewhere and so was a breach.

Foie Gras also showed the fact that originally there was no de minimus rule applied to Art 34 which was further supported in Bluhme [1997].

The court will apply a remoteness test to cases which fall on the perimeter of FMoG as seen in Krantz [1990] where good seizure if taxes weren’t paid was too “uncertain and indirect” to be a breach of Art 34.

The need to show discrimination of the rule was emphasised in Keck, and it is clear that the Article prohibits not only distinctly and indistinctly applicable rules, but also those that hinder market access (Commission v Italy (Trailers)). 

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Distinctly Applicable Measures

Directive 70/50 A2 sets out that imposing an additional requirement on the imported/exported good is a breach under Art 34 as they place a further burden on the importer (even checks, as these cause delays or transport costs). Other conditions could be the requirement of the goods to have a licence (International Fruit 1971), official approval (Postal Franking Machines) such as a certificate or the condition could refer to the composition of the goods (Foie Gras/Weinvertriebs). A second group of situations concerned to be DAMs are national rules which limit channels of distribution (De Peijper). Thirdly, National rules giving preference to domestic goods, as seen in Dundalk Water where water pipes had to be made to a specific standard by a specific company (as it was the only one the government had approved to make the pipes). “Buy National” campaigns either ran by the government, funded by or other way encouraged/facilitated are also held as being DAMs as seen in Buy Irish. This was clarified in Apple and Pears where as long as the advertising campaigns did not “put down” other member state products or encourage purchase purely because they were British, then they would not be a DAM. Where national rules reserve a % of market contracts for domestic companies it will be a DAM PreussenElektra.

In Tasca it was held that setting a maximum price for a product itself was not an MEE, however it could constitute one if the effect of the rule was too be one. For example the price was so low the only way you could import a product was at a loss. Libro confirmed the presumption of legality as it was a selling rule under Keck. In Van Tiggele the court identified two types of minimum sale prices were legitimate: a national provision prohibiting the retail sale of products at prices below the purchase price and secondly the fixing of a minimu profit margin at a specific amount and not as a percentage of cost price. Since Article 34 does not apply to wholly internal situations, reverse discrimination is compatible with Union Law as seen in Mathot.

 

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Cassis de Dijon

This case concerned a straightforward product rule that the composition of fruit liqueurs had to be above a certain % alcohol, if they weren’t German authorities would not let them into the country. It was indistinctly applicable as it applied to all spirits regardless of origin, however it applied more to importers as they did not have the rule in their country and so had a double burden. The court said, at Para 8: “Obstacles to movement within the Community resulting from disparities between 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 to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defence of the consumer”

They added to this in Rau, saying that the “rules much be proportionate to the aim in view. If a MS has a choice between various measures to attain the same objective it should choose the means which least restricts FMoG”. The German Government relied on two of the mandatory requirements: public health (low %alcohol causes binge drinking) and the protection of the consumer against unfair commercial practices (since alcohol is the most expensive part of the drink, having less would lower the price). Naturally the court rejected this.

The court also set out the process of Mutual Recognition: “There is therefore no valid reason why, provided that they have been lawfully produced and marketed in one of the Member States, alcoholic beverages should not be introduced into any other Member State”. It means that goods lawfully made and marketed in one Member State can in principle be sold in another without further restriction. Unless it is justified by reference to a mandatory requirement or the article 36 derogations, if the steps taken are proportionate and the national measure lawful, the national interest takes precedence over the free movement of goods.

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The Implications of Cassis

ADVANTAGES

1.    The ability of Member States to regulate products is maintained, but the limits are that national regulation cannot easily be used to protect the domestic product. 2.    There is an increase in consumer choice in that the market for goods from other Member States is opened up through the application of the principle of mutual recognition. 3.    The need for widespread harmonization is avoided. There is no need for EU legislation setting minimum standards. Cultural differences can be celebrated. 4.    It has been used as a principle in legislation 5.    The principles reflect a form of subsidiarity, since Member States retain considerable powers to regulate their own products. 6.    There is easier and quicker adaptation to technological change. 7.    The ‘best’ products should do well: the race to the top.

DISADVANTAGES

1.    There are risks in too much deregulation, which could lead to a race to the bottom— cheap and nasty does well. 2.    A combination of the very broad Dassonville formula read together with the Cassis de Dijon principles has arguably blurred the outer boundaries of European Union law. Some question whether equal burden rules should be caught by Article 34 TFEU at all. 3.    The Court of Justice is left to adjudicate disputes relating to choices made by Member States; and can be criticized for not always appreciating the issues. 4.    Article 34 TFEU which prohibits quantitative restrictions and MEQRs comes to be read as a right to trade, because too many national rules are open to challenge under it.

It is a direct contradiction with the principle that 36 TFEU is constructed narrowly.  

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Product Requirement Cases

Case 261/81, Rau, [1982] ECR 3961 (sale of margarine in distinctively shaped packaging to distinguish it from butter).

Case C-470/93, Mars, [1995] ECR I-1923 (special offers on the wrappers for the marketing of ice-cream bars of the Mars, Snickers, Bounty and Milky Way brands; regarded as unfair competitive practices).

Case 178/84, Commission v Germany (beer purity law), [1987] ECR 1227 (prohibiting the marketing of beers lawfully manufactured and marketed in another Member State if they do not comply with Articles 9 and 10 of the Biersteuergesetz).

Case 407/85, Drei Glocken, [1988] ECR 4233 (prohibiting the sale of pasta products made from common wheat or a mixture of common wheat and durum wheat).

Case C- 368/95, Familiapress v Verlag, [1997] ECR I-3689 (sale of magazines containing prize draws). 

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Product Requirement Cases 2

C 261/81 Rau was about the packaging of margarine being in a different shape box to butter in Belgium. The different shapes were to make it easier for the consumer to differentiate products. It was held as an MEE as it would increase cost to change the shape of packaging for companies. It was deemed that there was a different measure that could be implemented which was less restrictive and so not proportionate and therefore prohibited.

C 470/93 Mars is a German case about the import of Mars from France. The chocolate bars had been prohibited because they had included promotional indications in their wrappers that the bar included an extra 10% of chocolate. The justification was consumer protection (as the RRP was not decided by producers and so it was misleading to say an extra 10% free), and grounds of it being misleading (unfair commercial transactions) as the 10% label covered more than 10% of the chocolate bar.

C 178/84 Beer Purity Law – there was a law on how beer could be produced from the 1800’s which did not allowed additives in Beer in Germany. The court found this was consumer protection and the court felt they could feel the same result with a simple label and the consumer should be free to choose beer with additivies. C 407/85 Drei Glocken – in Italy there was a rule that Pasta could only be made with a certain type of wheat which led to the banning of German Pasta’s. The court said there were less restrictive measures which could still do the same job of ensuring that Italians had their X wheat pasta only. The court said that it could be called something other than Pasta, which critics have noted would probably be held as an MEE as well. C-573/12 Vindkraft (judgement from 1 July 2014) ECLI:EU:C:2014:2037 regarding a rule restricting trade in energy (and green electricity certificates) on the basis of the place of production of that energy. Within the case the CJEU refers to mandatory requirements (environmental protection) and Article 36 TFEU (protection of health and life). See also AG Bot’s opinion on the case. 

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The Market Access Approach

In Case C-412/93, Leclerc-Siplec, [1995] ECR I-179, Advocate General Jacobs criticised aspects of the Court’s approach to restrictions on the free movement of goods following the Keck judgment and cases following it. He then proposed an alternative market access test: 

"There is one guiding principle which seems to provide an appropriate test: that principle is that all undertakings which engage in a legitimate economic activity should have unfettered access to the whole of the [Union] market, unless there is a valid reason for denying them full access to a part of that market...then the appropriate test in my view is whether there is a substantial restriction on that access. That would of course amount to introducing a de minimis test into Article [34 TFEU]."

Case C-110/05, Commission v Italy (Trailers for mopeds), [2009] ECR I-519 (Grand Chamber) then used this idea - "Consequently, measures adopted by a Member State the object or effect of which is to treat products coming from other Member States less favourably are to be regarded as measures having equivalent effect to quantitative restrictions on imports within the meaning of Article [34 TFEU], as are the measures referred to in paragraph 35 of the present judgment. Any other measure which hinders access of products originating in other Member States to the market of a Member State is also covered by that concept... 58.          Such a prohibition may be justified on one of the public interest grounds set out in Article [36 TFEU] or in order to meet imperative requirements … . In either case, the national provision must be appropriate for securing the attainment of the objective pursued and not go beyond what is necessary in order to attain it … "

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Åklagaren v Mickelsson and Roos, [2009]

"even if those rules apply to all products alike, must be regarded as ‘measures having equivalent effect to quantitative restrictions on imports’ for the purposes of Article [34 TFEU] … . Any other measure which hinders access of products originating in other Member States to the market of a Member State is also covered by that concept"

The significance of this judgment:

       The Court declines to determine that restrictions on use fall within the Keck doctrine.

       The Court re-states the market access test as part of the prohibition contained in Article 34 TFEU (see §24).

       Paragraph 26 of the Court’s judgment is the clearest statement of a market access test up to the time of the judgment; and this is re-inforced in §28.

       It follows that market access test is now firmly embedded as part of the Article 34 TFEU case-law. 

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Market Circumstances Rules and Article 34

Mortelmans (1991) defines market circumstances rules as those concerning “who sells it, when, where and how he goes about it”.

They differ from MEEs in three ways:

1.       Whilst they both restrict volume of trade, unlike MEEs, they are neither designed to protect the home market nor do they in fact do so

2.       Generally non-discriminatory on domestic and foreign goods unlike MEEs

3.       Tend to affect retailers and not producers and so suffer no dual regulation issues. 

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THE TWO KECK CONDITIONS:

The Keck case lays down two conditions which must be met before a measure will fall outside the scope of Article 34 TFEU: Condition 1 (or principle of universality): State measures which constitute selling arrangements applicable to all affected traders within the national territory fall outside the prohibition in Article 34 TFEU, provided that - Condition 2 (or principle of neutrality): those measures affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member

National rules satisfying these two conditions do not breach Article 34 because according to the court, such rules do not prevent access to the market nor do they impede access for foreign goods more than they do so for domestic goods. Thus in Keck, the market access test is presented not as a condition on its own, but as a consequence of the fact that paragraph 16 criteria are satisfied.

-          GENERALLY, NATIONAL RULES ON SELLING ARRANGEMENTS DO NOT BREACH

De Agostini [1997] ECR I-3843, the Court said: 44.  Consequently, an outright ban on advertising aimed at children less than 12 years of age and of misleading advertising, as provided for by the Swedish legislation, is not covered by Article [34 TFEU], unless it is shown 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

Burmanjer [2005] has shown that traders must show substantial disparate impact and not just actual. If it is not substantial, it is not a breach (Karner [2004]). 

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The Article 36 TFEU Derogations

The first sentence of article 36 sets out an exhaustive list of derogations from which member states can use against Art 34/35 violations.

1.       Public Morality

2.       Public Policy or Security

3.       Protection of Health and Life of Humans, Animals or Plants

4.       Protection of National Treasures possessing artistic, historical or archaeological value

5.       Protection of industrial or commercial property

The court has imposed two constraints on the MS ability to use these derogations however, first since Art 36 constitutes a derogation from the basic rule of FMoG it must be interpreted strictly and secondly these cannot be used to serve economic purposes. The extent of the dereogation must also be proportionate. 

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Public Policy

Case 177/83 Ringelham [1984] ECR 3651:

Whatever interpretation is to be given to the term “public policy” it cannot be extended as to include considerations for consumer protection.

Case 7/78 Thompson [1978] ECR 2247 (coins no longer legal tender)

In Case C-265/95, Commission v France, [1997] ECR I-6959 (Spanish strawberries), the Court said:

… the Member States, which retain exclusive competence as regards the maintenance of public order and the safeguarding of internal security, unquestionably enjoy a margin of discretion in determining what measures are most appropriate to eliminate barriers to the importation of products in a given situation.

It is therefore not for the Union institutions to act in place of the Member States and to prescribe for them the measures which they must adopt and effectively apply in order to safeguard the free movement of goods on their territories. 

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PUBLIC SECURITY

Case 72/83 Campus Oil [1984] ECR 2727 (Irish rules requiring importers of petroleum products to purchase a certain proportion of their requirements at prices fixed by the competent minister from a State-owned company). They said this was for public security, so that there was always enough oil in the country. In addition there was an economic interest that the state owned company can survive financially. The court said once the public security was fulfilled, the economic gain did not matter.

C 398/98 Comm v Greece – Rules that companies had to store specific amounts of Oil in the country, for public security reasons. They could ask the refineries to hold onto the oil for them, as long as they had brought oil from the refinery before which was held as indirect discrimination as only Greek companies were likely to have bought enough from Greek companies before. The public security however was upheld.

Case 231/83 Cullet [1985] ECR 305 (national rules imposing a minimum price on the sale of fuel to consumers). The Govt argued that as the French retailers were struggling, there would be social unrest if they could not fix prices to economically help them. The court generally accepted it, but not in this case as they did not believe the French Govt. would not be able to control the demonstrations.

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PUBLIC MORALITY

Case 34/79 R v Henn & Darby [1979] ECR 3795 (pornographic material) - the court said if there was no unionisation it was up to the state to choose what protection they want.

In Case 121/85 Conegate [1986] ECR 1007 (seizure of inflatable dolls which were clearly of a sexual nature and other ****** articles), the Court said: 13.          The Court would observe that the first question raises, in the first place, the general problem of whether a prohibition on the importation of certain goods may be justified on grounds of public morality where the legislation of the Member State concerned contains no prohibition on the manufacture or marketing of the same products within the national territory. 14.          So far as that problem is concerned, it must be borne in mind that according to Article [36 TFEU] the provisions relating to the free movement of goods within the [Union] do not preclude prohibitions on imports justified 'on grounds of public morality'. As the Court held in its judgment [in the Henn & Darby case], … , in principle it is for each Member State to determine in accordance with its own scale of values and in the form selected by it the requirements of public morality in its territory. 15.          However, although [Union] law leaves the Member States free to make their own assessments of the indecent or obscene character of certain articles, it must be pointed out that the fact that goods cause offence cannot be regarded as sufficiently serious to justify restrictions on the free movement of goods where the Member State concerned does not adopt, with respect to the same goods manufactured or marketed within its territory, penal measures or other serious and effective measures intended to prevent the distribution of such goods in its territory. 16.          It follows that a Member State may not rely on grounds of public morality in order to prohibit the importation of goods from other Member States when its legislation contains no prohibition on the manufacture or marketing of the same goods on its territory. Conegate – the public morality was not upheld, as they allowed domestic producers to sell them, they only limited imports. The court simply didn’t believe it was the actual reason for the ban. 

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Protection of Health and Life of H, A or P

Case 53/80, Eyssen, [1981] ECR 409 (nisin in cheese) – a substance thought to be bad for humans, the court held you don’t have to prove the risk, as long as there is some evidence which shows it for you.

Case 40/82 Commission v UK (Re: Turkeys), [1982] ECR 2739 (Major difficulties when there is scientific dispute over the nature and size of the risk and the use of particular substances).

Case 174/82, Sandoz, [1983]: The state must recognise evidence for and against for a ban on public health grounds to be allowed. 

Case C-67/97 Ditlev Bluhme [1998] ECR I-8033 (animal health) – certain bees could not be exported to an island which contained a specific breed which would be extinct if new bees arrived.

Case C-379/98 PreussenElektra [2001]ECR I-2099 (environmental protection)

In Case C-170/04 Rosengren and others v Riksåklagaren, [2007] ECR I-4071 [wine imported into Sweden contrary to the Alkohollagen (Law on alcohol)], this was about proportionality and the Court said: 58. … a measure, such as that … under which private individuals are prohibited from importing alcoholic beverages, as it is unsuitable for attaining the objective of limiting alcohol consumption generally, and as it is not proportionate for attaining the objective of protecting young persons against the harmful effects of such consumption, cannot be regarded as being justified under Article [36 TFEU] on grounds of protection of the health and life of humans. 

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Commission v United Kingdom (turkeys from France):

-       The UK did not want to vaccinate turkeys as they thought it was dangerous, and wanted a procedure of tests.

-       Therefore they also banned imports due to the effect vaccinated turkeys could have. The ban came in right before Christmas.

-       The court said the UK haven’t based their bans on all proper medical studies (not sufficient evidence) and they said it did not link to a higher general health policy

-       They then said it looked very arbitrary, particularly the timing before Christmas and so was likely discriminatory.

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Mandatory Requirements - List

(1)    Protection of public goods and values: a.       Environment (Denmark) b.      Public health (Beer Purity) c.       Cinema as a form of cultural expression (Cinétheque) d.      National/religious socio-cultural characteristics (B&Q) e.      Maintenance of press diversity, cultural objects (Familiapress, LIBRO) f.        Animal welfare (Nationale Road) g.       Fairness of Commercial Transactions (Dansk Supermarked)

(2)    Protection of Individuals a.       Defence of the consumer (Cassis) b.      Protection of working conditions (Oebel) c.       Protection of Children (gmbH) d.      Road Safety (Trailers)

(3)    Protection of Public Order a.       Preventing the risk of seriously undermining the financial balance of the social security system (Decker) b.      Protecting the effectiveness of fiscal supervision (carciati) c.       Fundamental rights (Schmidberger) d.      Maintenance of order in society (Computer Games) e.      Fight against crime (Com v Portugal) f.        Preventing Fraud (Kakavetsos-Fragkopoulos)

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Consumer Protection

What are the problems of relying on labelling?

       Consumers do not read labels—or do they?

       Competitor can capitalise on research and development/brand name

       Are consumer rights being sacrificed at the altar of integration?

gmbH set out that the court has in mind the “presumed expectations of an average consumer who is reasonably well-informed and reasonably observant and circumspect” thus national laws  “protecting the unintelligent consumer” are not allowed as derogations.

The court will relax this standard in the appropriate circumstances, for example where the product is targeted at the vulnerable consumer (Buet).

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Proportionality Test

Two Stages: Suitability and Necessity.

As Tridimas said the means employed by the test must be suitable/adequate/appropriate to attain the ends. As the court said in United Foods there has to be a reasonable connexion. The second test is one of weighing competing interests. The court assesses the adverse consequences that the measure has on an interest worthy of legal protection and determines whether those consequences are justified in view of the importance of the objective pursued. The burden of proof is on the national authority to show their rules satisfy this test. However as the court pointed out in Trailers the burden cannot be so extensive as to require the MS, to prove that no other conceivable measure could enable that objective to be obtained under the same conditions. Generally the court will find outright bans to be disproportionate as less restrict alternatives will likely exist. And for when national rules prescribe someone needs a licence, Canal Satélite Digital the court laid down four criteria for an authorization requirement to be justified:

1.       Objective, no-discrim criteria known in advance

2.       Must not duplicate controls which have already been carried out

3.       Any subsequent control would be too late to be genuinely effective

4.       Should not deter operators from pursuing the business due to duration and disproportionate costs

Labelling is the courts favoured solution to pretty much everything as seen in Rau which was the case about the shape of the margarine containers. 

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Human Rights?

The CJEU attempt to strike a balance between the protection of fundamental (human) rights and the four freedoms means that fundamental rights do not automatically prevail. This can be well demonstrated by reference to the case law of Viking (C-438/05 [2007] ECR I-10779) and Laval (C-341/05 [2007] ECR I-11767). Both cases concerned the question whether the right to strike my limit the four freedoms, more specifically the freedom to establishment (Viking) and the freedom to provide services (Laval). In both cases the CJEU emphasised that the right to strike has to be balanced with the right to free movement

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