COMPETITION POLICY

It is important to have healthy competition or else market stands at the same place. No or very
small chance to grow.
ARTICLES 101 AND 102 TFEU: EU competition policy is one of the original policy grounds
of the 1957 EC treaty with many objectives, a few of which are common to all competition
systems and some specific for EU. In order to create a union-wide market while promoting
economic efficiency:
1) Minimum cost for the production of a good or service
2) Maximum output
3) Maximum surplus from the operator of the market
4) Efficient allocation of resources
5) Boost to innovation
6) Effective competition boosts ‘consumer welfare’
Competition policy ensures that consumers get appropriate prices with greater quantity and better
quality of goods and services/wide variety. It protects against pricey or poor quality/limited
choice of products.
ARTICLE 101: It provides that an agreement between undertakings, decisions by associates of
undertakings, concerted practice which may affect trade between member states with an object or
effect to prevent, restrict or distort competition is prohibited.
UNDERTAKING:
Hofner and Elser: Undertakings are such bodies which are involved in economic activity.
Such as companies, partnership, persons/individuals such doctors/lawyers etc.
Public authority is excluded from this definition. (P Fenim)
Economic activity: Activity of providing, making, buying or selling commodities to satisfy
needs of people/general public. This comprises of production, distribution or utilizes production
or services.
Public authority: State bodies using money from public funds for public health systems
Social welfare A body carrying out commercial or economic activity must fall upon the
competition rules.
CentraFam case: The agreement must take place between two undertakings. If it is
between a subsidiary and parent company it will not fall under the category of an
agreement.
AGREEMENT:
Consien and Grundig: Agreement may be horizontal (same line of production-
manufacturer to manufacturer) or vertical (different line of production-manufacturer to
distributor)
Chenipharma case: Legal formal contract isn’t a requirement.
Polyprypelene case: Even negotiations held to be agreements
Negotiations were still taking place and nothing had been really finalized but still fell under
article 101. Not essentially a one-off event. Result lasting for year.
Volkswagon case: Implied agreement also held to be an agreement for the purposes of
article 101.
Bayer case: Unilateral acts do not fall under article 101. Since the agreement must take
place between two agreements, simply making up your mind doesn’t mean that you fall
under article 101.
Commission v. Anic Partecipazioni:
DECISIONS BY ASSOCIATIONS OF UNDERTAKINGS
Any regulatory authority passing any decision which has the ability to distort competition
is prohibited.
Wouters: Individual members of Dutch Bar associations regarded as ‘undertakings’ and
the bar association as an association of the undertaking.
Rule preventing lawyers to enter into partnerships with accountants held to be a breach of article
101.
Spanish association of industrial Property: There was a fee required by the association
whenever the licenses were to be renewed. This practice was held to be anti-competition as
it made it difficult for those to compete who did not have any money.
CONCERTED PRACTICE
Undertakings deliberately take part in covert activity to reduce competition in the market. When
a company behaves a certain way and the other one follows the way without any agreement. This
is referred to as patterned behavior. E.G. If Pepsi decreases its price and coca cola does the same,
smaller companies will not be able to sustain the burden but the bigger companies like pepsi and
coca cola can. This will lead to removal of smaller companies from competition. Concerted
practice in normal circumstances is disallowed except where the market structure is one of
oligopoly. (smaller market structure with smaller amount (hence they larger shares in the market)
of producers/suppliers, none of whom can have a noteworthy influence on the others).
ICI v. Commission Dyestuff: Concerted practice is explained as a principle where
undertakings follow a pattern to coordinate without actually having a dialogue or
agreement. The only exception is oligopoly market
Sugar Cartel: Commission held that a few companies were engaged in concerted practice.
The manufacturers however, said that they did not strategize to restrict/distort
competition. It was held some contact and conscious cooperation between the companies
was necessary to establish concerted practice.
Wood Pulp: A presumption of oligopoly arises when there is concerted practice but it may
be rebutted.
THE OBJECT OR EFFECT SHOULD NOT BE DISTORT FOR COMPETITION
If intention to distort competition but no effect on competition between undertaking, you’ll be
caught by article 101. If no intention to distort competition but it had the effect of doing so, it
will be caught by 101. Adjudicated by commission. Competition policy can be approached in
two ways:
a) Illegal per-say approach
A strict rule where the merits of the agreement are disregarded and only the object or effect is
looked at. Where an apparent anti-competent object can be removed it is illegal per se and there
is no need to observe its real effect on the market.
It was stated in Consien and Grundig that or means that these conditions are alternative and not
cumulative. The case held that the wording object or effect is disconnected so where the
agreement is found to have its object, there is no need to establish an effect.

b) Rule of reason approach

Distinctively, this approach draws reasons for the agreement laying out the logic for it and its
potential advantages after carrying out a cost benefit analysis.

Illegal per se approach was criticized which lead to block exemptions:

Consien v. Grundig: If B aims to sell only A’s products since A wanted to enter the market this
action will be held to be wrong as commission stated that this agreement was illegal under illegal
per se approach. A argued that to enter into the market he needed a distributor whose sole focus
would be on A. If the rule of reason approach would’ve applied the benefits and logic of the
agreement would’ve been analyzed and it would most probably have been saved.
Agreements that are prohibited under 101(1) can be exempted under 101(3). To allow
exemption it was important to compare the for and against effects of competitive policy of the
agreement concerned.
To do this a two-step structure is devised.
1) The agreement must first be regarded as prohibited by 101(1)
2) Then it will be considered for exemption under article 101(3) after a comparison of pros
and cons of competitive effects.
The agreement is declared illegal as per illegal per se approach
The commission exempts the agreement.
3 types of agreements that were established under the block exemptions:
a) Exclusive distribution (distributes only one brand’s products)
b) Exclusive purchase agreement (only purchased from one brand/undertaking)
c) Franchise agreement
Usually, earlier these agreements were regarded as Illegal under illegal per se approach or were
held to be void.
4th exception: Founded through ECJ case law
METRO: Exception of selective distribution was regarded as illegal
This was allowed provided the standard criteria is fulfilled.
a) It can be validated by the nature of the products
b) The selection process is objective and proportionate
c) Application in a non-discriminatory way
THE OLD SCHOOL BLOCK EXEMPTIONS WERE REPLACED BY THE NEW STYLE
BLOCK EXEMPTIONS
NEW STYLE BLOCK EXEMPTIONS:
1) VERTICAL BLOCK EXEMPTIONS
Exemption:
This exemption came from article 101 (3)
If the market share of the supplier is less than 30% the undertaking will not fall under article 101.
As per article 4 of regulation 2790/99 to escape exemption under article 101 there must be no
restriction e.g. price fixing or limitation output of sales. If supplier’s market less than 30%
contract not regarded as breach.

2) HORIZONTAL BLOCK EXEMPTIONS:

As per regulation 1217/10 horizontal exemptions that deal with research and development are
excused from 101.

3) INDIVIDUAL BLOCK EXEMPTIONS:

If an undertaking does not fulfill the criteria of horizontal or vertical block exemptions, it can be
claimed under individual block exemptions if:
a) The undertaking influences the production or distribution of goods for improvement
or positive impact on technical or economic development.
b) Consumers get a fair part of this agreement (consumer protection)
c) Such agreement is not a threat to competition (agreement eliminate protection)
WOLK CASE:
De Minimus Rule: Undertaking having smaller share cannot distort competition, which means
they’ll not be held liable under article 101 even if they decided upon an anti-competitive policy.
The rule was taken further in minor importance 2001 under which it was held that undertaking
will not held under article 101 if the market share does not exceed
10% (for horizontal undertaking) 15%(for vertical undertaking) For mixed (ask ma’am)
agreement the limit of 10% applicable
ARTICLE 102:
Undertakings that have the ability to control the market and they misuse that position/power.
Undertakings will be held liable if:
1) Its dominant (can be judged through market share).
2) And this dominance is abused.
Chemie v. Commission: Usually the undertakings which have 50%market share are held to
be dominant
British Airways v. Commission: 37% share was enough to establish dominance.
United Branch Case: Relevant products at the market are interchangeable. (coke and pepsi
are interchangeable with fanta and sprite)
Hoffman: The dominant undertaking should have retained the market share for some time.
Flat Glass: It was held that collective dominance may also occur if 2-3 undertakings
together dominate the market.
Then does breach occur: When dominance is abused.
ABUSE: The principle of dominancy is not in itself disallowed rather abuse of that dominance is
prohibited.
Hoffman: the definition of abuse is considered to be broad so whenever the growth is
interrupted abuse will be established.
ABUSE can be divided into two classes:
1) Exploitative abuse: Whenever consumers are abused. (coke sold at 100 instead of 50-
people affected)

2) Anti-competitive abuse: whenever the competition is abused (coke sold at 10 instead of

50-effects undertakings)
Healthy competition is encouraged to ensure the effectiveness of the market. (greater power
requires greater responsibility)
Michelin case: EU undertakings must make sure that they do not become a part of anti-
competition policy.
TYPES OF ABUSES:
Excessive pricing: United Brand—To find out if the abuse is occurring because of excessive
pricing, cost price and selling price will be compared and contrasted.
Predatory Pricing: Price is so low that it removes other competition. Hence, is considered
as an abuse of power.
ACZO: Selling at very low price/ malafide intention/force out competition
Selective Pricing:
Irish Sugar-When different customers are treated differently it will be held to be under the
heading of selective pricing and an abuse of the market. But discount cards are not treated
under this heading.
Tying or clubbing together:
Dominant and non-dominant products cannot be attached together as it has the effect of
forcing individuals to buy a product. Tetra pack, Microsoft v Commission.
So offers like buy one get one free are not allowed as it hinders competition.
And if two products are tied together it will be regarded as illegal.

1) Refusal to Supply:

When there is a demand for a product but its supply is stopped so the products can be sold in
black market. e.g. there is a demand for a certain a chemical in a medicine but the manufacturers
of that chemical stop providing it so it may be sold in black market.
Commercial Solvent: If the refusal for payment is justified it will not be held to be the
breach of contract. Article 102 has no exceptions but it can be objectively justified. E.g.
supplying of products, discounted prices.
ENFORCEMENT: REGULATION 1/2003 - It played an important part in decentralizing
enforcement of EU competition rules. The main aim to do so was to relive the commission
of this heavy burden of workload from their shoulders so they can pay more attention to
the more serious infringements. Underneath the system of ‘parallel competences’ was
created allowing a case to be dealt with by a single national completion authority or a
bunch of NCAs or by the commission. The C together with the NCA is known as European
completion network. The system allows the undertakings to be responsible themselves and
judge whether their agreements or activities are compatible with EU completion rules.

FREE MOVEMENT OF GOODS

Single market is a legally sought method for boosting economy.
It has two main purposes:
1. Removal of existing barriers (e.g. custom duties, import quotas and other trade barriers).
As this includes eradication of prevailing trade barriers it can be referred to as
NEGATIVE INTEGRATION.

2. Harmonization of national rules such as safety requirements. Since this entails formation
of new EU standards and laws to be applicable on all the member state for easy trade of
goods, this is known as positive integration
Difference between monetary barriers and other barriers
Monetary barriers: It includes payment of some fee as per Article 28-30 OR discriminatory
under Article 110 TFEU.
Other Barriers: No payment of fee and something falling under the ambit of derogations given
in Articles 34-36 TFEU.
e.g. if a national law obliges for an inspection of goods crossing border and there is a fee for this
inspection. So inspection itself is a barrier under Article 34-36 and the fee for it falls under
Article 28-30.
FREE MOVEMENT OF GOODS PROVISIONS IN THE TFEU:
Custom duties on exports and imports (article 28 and 30 TFEU)
Charges having equivalent effect to custom duties (articles 28 and 30 TFEU)
Discriminatory internal taxation on imported goods (articles 110 TFEU)
Quantitative restrictions on imports and exports (articles 34 and 35 TFEU)
These provisions are applicable to goods which are defined as something that has a monetary
value and are used in commercial transactions. (Commission v. Italy (Art Treasures))
ARTICLE 35 TFEU AND THE PURELY INTERNAL SITUATION:
Even though it appears that the free movement of goods provisions tend only to goods that cross
border and not internally within a member state. However, in the case of Jersey Produce
Marketing Organization Ltd v. States of Jersey the court found there to be breach of
article 28 and 35 due to the requirement imposed on exporters of Jersey potatoes. To
export potatoes a party must be a part of the particular marketing board. This condition
was held to be a breach of article 35 TFEU. Furthermore, asking for contributions for the
marketing board from producers was a breach of article 30 TFEU.
CUSTOMS UNIONS:
The EU is a customs union formed under article 28 TFEU under which member states
cannot impose any custom duties on member states and a common customs Tariff in trade
should be applicable on non-member states.
TARIFF BARRIERS TO TRADE WITHIN THE EU:
Article 30 TFEU: No custom duties on imports and exports and charges having equivalent effect
will be prohibited among the member states. It will also be applicable on custom duties of
monetary nature.
CHARGES HAVING EQUIVALENT EFFECT TO CUSTOMS DUTY(CEE)
Commission v. Italy (statistical levy): Levy a small fee imposed for the publication of the
statistical information. The ECJ held that it was the effect and not the purpose which was
at the core of this matter. And this fee’s effect was equal to customs duty because it put
imported goods at a disadvantage.
The vital part of this test is to prove that money is to be paid because a border has been crossed.
Within the EU. So if the money taken for a service like a storage facility then the fee won’t be
illegal. CEEs are also applicable to goods from non-member states (Diamantarbieders v.
Indiamex) so in addition to common customs duty as decided by EU no other charge by the
member state itself cannot be applied.
EXCEPTIONS:
Although article is strictly applicable except for three situations:
1. Fair payment for an actual service for the importer/exporter
2. When fee applicable by the EU or international law for inspection
3. It falls in the ambit of internal taxation
Payment for a service:
The particular advantage should be for the specific importer/exporter and not for general interest
of exporters or public at large.
Commission v. Belgium: Charge will be lawful if advantage is provided for a service done
for an importer and the fee charged is the actual money for he providing that service.
Domestic taxes apply to imported goods:
If the taxes on imported and domestic products are equal it can be called an internal tax and will
be legal to apply a domestic tax on imported goods. These taxes are under article 110 and not
article 30. They are mutually exclusive and if a product crosses border article 30 applicable.
Taxes also applicable where no other comparable domestic product (cooperative Cofrutta Srl)
ARTICLE 110 TFEU ON DISCRIMINATORY TAXATION
THE APPLICATION OF ARTICLE 110 TFEU
Article 110: Prohibits any sort of taxation which has the effect of discrimination between
domestic and imported products; favoring the former. The aim for this is to achieve financial
equality between the two products.
Article 110(1): Prohibits those taxes which are imposed on imported goods, in addition to the
‘direct/indirect’ tax imposed on the domestic goods.
Article 110(2): Prohibits internal taxation which has the effect of protecting domestic products.
Internal tax defined in (cooperative Cofrutta Srl)
Direct effect: 57/65 Lutticke:
Method of collection: In commission v Ireland it was held to be discriminatory and a breach of
article 110 where the domestic producers were given more time to pay as compared to importers.
THE RELATIONSHIP BETWEEN ARTICLE 110(1) AND 110(2): SIMILAR AND
COMPETING PRODUCTS
Commission v. UK (wine and Beer): Different ingredients used and the products had
different qualities.
This means that the products weren’t similar for article 110(1). So can they be competing for
article 110(2)?
If two products fulfill the same consumer needs, then that product can be called competing. Tax
on wine greater than on beer. But the choice for consumers increase with imported goods and it
should not be effected by high taxes so both the products held to be competing.
Commission v. France (Tobacco): Both types of products were held to be similar as they
were made from same raw materials and accomplished the same consumer needs.
DIRECT DISCRIMINATION OR INDIRECT DISCRIMINATION:
If difference in taxes because of from what country the product came, clear-cut breach of article
110 TFEU.
Haahr Petroleum: Direct discrimination
Indirect Discrimination occurs where the tax is not imposed due to the origin of a country but the
tax is imposed on such particular nature of products which are only found in imported products.
This means an indirect tax protection for domestic products arises. And this protective effect is
important to prove indirect discrimination (Commission v. Greece).
Danske Bilimportorer v. Skatteministeriet: No breach of article 110 because there were no
Danish products gaining protection because of the registration tax.
CONSEQUENCES OF BREACH OF ARTICLE 110 TFEU:
It is determined by the article which is breached. In case of article 110(1), similar products
stringent equality should be enforced on taxes and in case of a sliding scale, imports to be placed
at the lowest place on the line.
If the products are competing, it’s not important to apply equivalent taxes rather they should be
as such that they don’t have a protective effect on domestic products. (commission v. Belgium)
THIRD COUNTRY GOODS:
Article 110 not applicable for imports from third world countries with which the EU has not
made such agreement.
EXPORTS:
Although Article 110 not applicable on exports, the ECJ might apply it if domestic market pays
lesser than those for exports.
ARTICLES 34-36 TFEU ON QUANTITATIVE RESTRICTIONS AND MEASURES
HAVING EQUIVALENT EFFECT TO A QUANTITAIVE RESTRICTION
QUANTITATIVE RESTRICTION AND MEASURES OF EQUIVALENT EFFECT
Article 34 is on prohibition of quantitative restriction on imports and all measures having
equivalent effect to quantitative restriction. The article 35 applies the same prohibition but in
relation to exports.
Quantitative restrictions are defined as ‘quotas’ or limits on the quantity of goods which can be
imported between countries. There is prohibition on this because it is discriminatory.
Total ban equals quota of zero.
Bodegas Unidas: The law was held to be a QR on exports which made it illegal under
Article 35.
‘Measures having equivalent effect to a quantitative restriction’ is dealt with in the directive
70/50 rather than the treaty. This directive emphasizes on discriminatory measures. Which can
also be called distinctly applicable measures. Since they make importation difficult and costly.
(article 2)
Article 3 of the directive deals with ‘indistinctly applicable measure’ which are as such that
measures are equally enforced on domestic and imported products. They are allowed by
commission if they pass the proportionality test: not above and beyond the true purpose which
could have been achieved by some other way which would be less of an obstacle.
Although directive not currently applicable but has an effect on case law. The requirement of a
state measure: for the enforcement of article 34 there needs to be a state measure.
Commission v Ireland (Buy Irish): Council: a public body capable of passing state
measures and hence article 34 applicable.
Commission v. France: Inaction by the state against the disruption caused by NGOs for
imports liable for breach under article 34.
MEASURES HAVING EQUIVALENT EFFECT TO A QUANTITATIVE
RESTRICTION (MEQRs)
Article 34 also applies to actions which aren’t discriminatory in law (equal application on
domestic and imported products) but have a discriminatory effect (indistinctly applicable).
Definition of MEQR: Any action by the member state which can hinder/disrupt directly or
indirectly import of any sort. Emphasis on hindrance and not discrimination.
In Buy Irish the fact that action by the goods Council can possibly effect imports was held to be
an MEQR and thus enforced under article 34.
DEROGATIONS UNDER ARTICLE 36 TFEU:
Allows member state to move away from article 34 and 36 and allow discriminatory restriction
(distinctly applicable) and non-discriminatory restriction (indistinctly applicable) rules but the
conditions for doing so are very restricted.
PUBLIC MORALITY
Henn and Darby case: Each member state has its own understanding of morality and can
be provided discretion for it. However, if such product is not being imported it should not
be produced domestically as well.
Congate v Customs & Excise: UK ban was disproportionate because the banned product
was still being sold in parts of UK.
PUBLIC POLICY
This exception is seldom used and when it is, it should be made sure that it is done so for
just economic reasons. (commission v Italy)
PUBLIC SECURITY
Campus Oil Case: Trade may be restricted if public security at threat but this restriction
must be proportionate to the action taken. In this case the importance of ensuring the
survival of oil refinery was held to be justified concern of public security.
PROTECTION OF HEALTH & LIFE OF HUMANS, ANIMALS AND PLANTS
There should truly be a threat to health, and it must be proved that the earlier health regulations
and checks were inadequate in some way. Additional tests will only be carried out if the earlier
ones are inadequate.
Any principle is really an MEQR because even if it not applying a charge it causes disruption.
(since border checks or health inspections are by definition MEQRs, since they disadvantage
foreign goods via time delays. )

Any additional tests to those already complied with in the exporting state will be necessary if the
earlier ones were inadequate. (Commission v. United Kingdom)

Doc Morris Case: Prohibition on medicines through mail by Germany. This restriction was
held to be proportionate and justified only if applied to those medicines which required
prescriptions.
Commission v Germany (Additives in Beer): Germany’s restriction on the basis of health
concerns was not justified because the ingredients being used were the same in other
countries. And in such situations will take into account the opinions of accredited
international bodies to see whether health really effected.
Criminal Proceedings against Ditlev Bluhme: Ban on one type of bee to protect it from
another type was considered legal since it was proportionate and justified.
Sandoz case: Where the scientific information is insufficient to understand the health risks
and to what extent protection important, it will be decided by applying the precautionary
principle. It is upon the member state what precautions they need to take but they must be
taken keeping regard of the principle of free movement of goods (proportionate).
Commission v. Denmark: The member state can take any precautionary measures it wants
provided that it is necessary and proportionate.
Commission v Netherlands: It lays down the conditions for the precautionary principle.

1. Recognizing the possibility of the adverse consequences to health of a particular

ingredient
2. A comprehensive research as to the possible risks from authentic sources.
3. Where the scientific research is unclear but the risk hangs on the public’s head,
restrictive approach is acceptable.

The burden of proving the ingredient’s negative impact is on the member state. -
Commission v Italy (Caffeine)
Protection of industrial and commercial property
Protection of national treasures possessing artistic, historic or heritage value
Public Policy: public policy concerns like the right to protest or right to policing, as in the
International Trader’s Ferry Case are applicable under the derogation.

(FOR INDISTINCTLY APPLICABLE MEASURES)

Cassis de Dijon: THE APPROACH TO INDISTINCTLY APPLICABLE MEASURES

Even though indistinctly applicable measures are applied equally on both types of goods it may
prove to be a bigger hassle for the importer. Such measures result in dual burden for the
importers because they have to take care of the requirements in their state and other state when
manufacturing products which is a breach of article 34. For this purpose, the court introduced the
principle of mutual recognition which states that if a product made by a member state is
appropriate to be sold in one member state it should be freely marketed in others too.

Furthermore, the courts stated that in the absence of any directive or regulation a member state
can enforce its laws on domestic goods and these laws will be enforceable on imported goods
only if:

a. Uniform enforcement of law on domestic products

b. Mandatory requirement: the law is vital for the safety of public
c. It is proportionate (not more restrictive than it needs to be to achieved the prescribed
goals)

These are original four foundations: consumer protection, fiscal measures, public health and
fairness of commercial transactions on the basis of which member states can compel the
importers to follow national law (only for indistinctly applicable),
This list can continue to grow because of new cases. New additions of environmental protection,
media pluralism and preservation of national culture have been added.

CONSUMER PROTECTION:

Walter Rau Case: Belgian rule required that margarine should be sold in cube shaped
container to prevent confusion with butter. The court held this to be disproportionate and
hence the law was not enforced.

Although some cases like ‘buet’ and ‘oosthoek’ were successful on the consumer protection
claims. They may not be successful with the same claim today.

Centrosud Case: In Italy only pasta containing a specific wheat could be sold.
Mutual recognition, argued. It was decided that it should be labelled rather than to enforce
laws which effect trade.
If discriminatory exceptions under Art 36 is allowed; but if non-discriminatory together
with Art 36, mandatory exceptions are also applied.

PUBLIC HEALTH:

On this matter article 36 provides for derogations and if this treaty article can be relied upon, no
need to fall on ‘mandatory requirement’

PROTECTION OF THE ENVIRONMENT:

Commission v. Austria: Rules made by Austria were considered to be acceptable under the
mandatory requirement but was held not to be proportionate.

ARTICLE 35 TFEU AND EXPORTS:

The prohibitions under this article applicable only for discriminatory measures and not
indistinctly applicable measures.

Jersey Produce Marketing v. States of Jersey: As per Article 35 policies applied by the state
of jersey were held to be incompatible. UK and Jersey were to be considered one state for
the principle of free movement of goods. The court held that problems arising out of
regional barriers were to be solved in the same way as intra-EU ones. Hence on the basis on
article 35 it was decided that potatoes after coming into UK could be re-exported. And an
intra-EU factor was created.

DEALIENTAING THE SCOPE OF ARTICLE 34: KECK:

The broad definition of MEQR in Dassonville together with Cassis de Dijon (indistinctly
applicable measures) created problems for national law based on article 34. Hence they
required justification under article 36 or Cassis de Dijon mandatory requirements.
Borough Council v. B&Q plc: Restriction on both domestic and imported goods, by the
state on selling particular kinds of goods on a Sunday. Even then the ECJ needed the rule
to be justified.

Criminal proceedings against Keck and Mithouard: Keck put a cap on the number of
measures under article 34 TFEU.

The court held that: the article would not apply to particular selling arrangement if it is
applicable to everyone equally and it effects in the same way (in law and in fact) the
marketing of both kinds of products,

Hence two types of trading regulations came to life: product requirements and selling
arrangements:

Product requirements posed those features which would need to be changed for trade and
hence would inflict dual burden. Such as alcohol percentage in Cassis de Dijon was called a
product requirement due to which there was obstruction for foreign producers, and so fell under
Article 34 (discriminatory measures).

If there is a need for physical altercation to the product or its ingredients: product requirement.

Selling arrangement on the other hand only concerned with the manner in which the product is
marketed rather than the characteristics of the product itself. For e.g. Sunday Trading
regulations. This means no “dual burden” hence not under Article 34. Things like advertising
(Hünermund), and methods of selling come under this.

Clinique: The name of the product falls under this category but in this case the restriction
on name was held to be disproportionate by the court.

Familia Press Case:

The restriction of giving out cash prizes in a magazine competition was held not to be a
selling arrangement because it required a change in the content of the products. It will be
referred to as an MEQR and hence fall under article 34.

There is criticism on the KECK test because where the selling arrangements are too narrow it
creates a restriction on marketing for foreign goods as Lord Advocate in Leclerc-Spielec stated
that there is a greater need for foreign products to be marketed and this restrictive approach was
not really helpful. Since domestic products already known to people by the imported goods
required advertisement to enter market.

REFINEMENT OF KECK: THE MARKET ACCESS TEST

In TK Heimdienst GmbH it was held that even though the law in question referred to
selling arrangements but that was not the case because that particular law did not apply
equally and in fact since it hampered access to market for the imported products. This
came under the umbrella of article 34 even if it was called as a selling arrangement.

GIP Case (Gourmet International Products): The Swedish ombudsman argued that law
effecting advertising fell under selling arrangement and was not prohibited under article
34. However, the court held that as per KECK selling arrangement must not act as a
hindrance to access to market. And in this case it did had the effect of hindering access for
imported products so it would be prohibited under Article 34.

As for the public health as grounds for the rule to be applied it was for the courts to state
by taking into account proportionality test and whether the same effect could be achieved
by an action that would had a lesser effect on trade.

THE END OF KECK?

The Keck continues to be criticized as seen in the case of Commission v. Italy where the courts
held that the prohibition by Italy had an effect equivalent to quantitative restriction on
imports as per article 34. It is important to note that courts preferred to follow an ‘access
to market approach’ instead of ‘use arrangements’.

Mikelsson: It was held that even if an obligation is not aimed for or has the effect of
treating imported goods adversely, this rule may affect how the consumer view this product
which will in turn effect the access to market. This shows that such restriction cannot be
applied hiding behind the KECK test.

Although it is important to remember that in both the cases the courts stated that obligations
could have been allowed on the basis of public aims like road safety and protection of the
environment.

Flashcards:
What are MEQRs?
Measures Having Equivalent Effect to QRs - disguised restraints on imports (/exports)
There are two sources to consider in order to analyse how EU law defines MEQRs. What
are they?
Directive 70/50 (inoperative, but still influential)
CASE LAW - Procureur du Roi v Benoit and Gustave Dassonville
How did Directive 70/50 go about defining MEQRs?
It divided MEQRs in to two categories - distinctly applicable and indistinctly applicable.
According to Directive 70/50, what are distinctly applicable MEQRs?
Measures that do not apply equally to domestic and imported goods... such measures
discriminate against imports because they make importation more difficult and costly relative to
the domestic product (e.g. demanding higher safety checks on imported goods)

According to Directive 70/50, what are indistinctly applicable MEQRs?

Measures which appear on their face to be equally applicable to domestic and imported goods,
but the effect of the measures disadvantages imported goods by requiring them to satisfy the
state's domestic set of rules for similar products. These measures cover the marketing of products
in the widest sense (e.g. butter packaging)
Distinctly applicable
Discriminate against imports making their importation more costly relative to domestic products
Example of Distinctly applicable; higher safety checks for imported products
Indistinctly Applicable
By requiring imports to meet the same rules for domestic products, puts the imported product at
a disadvantage. Example of indistinctly applicable; requiring imported butter to be re-packaged
into identical tubs to domestic butter
Students will have to apply the two prongs of the proportionality test: suitability (to determine
whether it may reasonably be concluded from the evidence submitted by the Member State
concerned that the means chosen are appropriate for the protection of public health); and
necessity (whether it is possible to attain the objective by measures that are less restrictive of the
free movement of goods)
Deutscher Apothekerverband