FREE MOVEMENT OF GOODS II: ARTICLES 34-36 – NON

FISCAL BARRIERS TO TRADE

Examples:

 Bans on imports
 Quotas on the quantity of goods which can be imported
 Restrictions on sales
 Rules on physical characteristics
 Measures regulating promotion of goods

Restrictions on any of the above may be able to be justified on the basis of morality, public policy,
public safety and public health (Article 36)

1. WHO IS BOUND BY ARTICLE 34?

Article 34 only applies to public bodies and quasi-public bodies.

R v ROYAL PHARMACEUTICAL SOCIETY OF GREAT BRITAIN

 Measures adopted by a professional body which has had regulatory powers conferred upon
it by the State may fall under Article 34.

COMMISSION v IRELAND (Buy Irish)

Facts: The Irish government made a company to promote Irish goods and appointed its management
committee, gave it public funds and defined its aims.

Principle: MS can’t circumvent obligations by using a private company

COMMISSION v FRANCE (Spanish Strawberries)

Facts: Over a long period of time, French police failed to take sufficient preventative measures
against farmers who obstructed the free movement of Spanish strawberries and Belgian tomatoes.

Principle: A MS needs to take necessary and appropriate measures to prevent FMOG being
obstructed by private individuals.

2. ARTICLE 34 : RESTICTIONS ON IMPORTS

Two types of restriction:

i) Quantitative Restrictions
ii) Measures Having Equivalent Effect (MEQR)

2.1. Quantitative Restrictions

GEDDO v ENTE NAZIONALE

‘Measures which amount to a total or partial restraint … of imports, exports or goods in transit’

R v HENN AND DARBY

Facts: Henn and Darby imported pornographic material into the UK, something which breached a
statutory offence in the UK. The Court held that the statutory offence itself actually breached Article
34 because it banned the import of a material.

Principle: Measures which ban the importation of a product will be a breach of Article 34.

INTERNATIONAL FRUIT CO. v PRODUKTSCHAP VOOR GROENTEN

Licensing system which only allows importers to import a certain quantity of product is also banned.

2.2.Measures having Equivalent Effect to Quantitative Restrictions (MEQR)

 Basically means disguised barriers to trade. For example, national measures which dictate
physical characteristics that a product has to satisfy – shape or packaging.
 Complex jurisprudence in tackling MEQRs, we have two methods:
i) Directive 70/50
ii) Procurer de Roi v Dassonville

2.2.1. Directive 70/50

 Only applies to measures which were in place at the time the EEC Treaty was signed
 Divides MEQRs into two groups:
i) Distinctly Applicable Measures – measures which don’t apply equally to domestic
products and imports so make imports more difficult (e.g. requiring higher standards
of imports compared to domestic products)
ii) Indistinctly Applicable Measures – measures which apply to both domestic and
imported products but which have the practical effect of disadvantaging imports.

2.2.2. Dassonville 1974

‘All trading rules enacted by Member States which are capable of hindering, directly or indirectly,
actually or potentially, intra-community trade are to be considered as measures having an effect
equivalent to quantitative restrictions’

 Distinct v indistinct matters because of the defence to each is different

 Distinctly applicable measures can only be justified under Article 36 derogations
 Indistinctly applicable measures can be justified under Article 36 or mandatory requirements
 The Court has taken a wide approach to the interpretation of “All trading rules”

COMMISSION v IRELAND (Buy Irish) and COMMISSION v FRANCE both held that the Dassonville
formula had a wide reaching interpretation of what could constitute a measure. In Buy Irish it was
clear that there only needed to be a potential impact on trade between Member States.

2.2.3. Case law on distinctly applicable MEQRs

a) Imposing additional requirements on imported goods

FIRMA DENKAVIT FUTERMITTEL v MINISTER FUR ERNAHGRUNG

 Imports of milk based feeding stuffs into West Germany had to fulfil stringent measures
 The measures were imposed to combat salmonellae:
i) Needed certificate from exporting state confirming heating process
ii) Samples needed to be sent to WG veterinary inspector to ensure absence
iii) The measures were held to be MEQRs
  Court of Justice left it to the national court to decide whether they could be justified under
Article 36 derogations

b) Restricting channels through which goods can be imported

PROCURER DE ROI v DASSONVILLE

 Belgian man and his son were importing Scotch into Belgium from France
 It was very difficult to obtain the correct certificate to certify the origin of goods for
authenticity
 So they forged the certificate and got caught
 Court held the requirement was a MEQR as very difficult to obtain certificate if one wasn’t
importing from the country of origin (which would have been Scotland in this case)

c) National rules giving preference to domestic goods

COMMISSION v IRELAND (Buy Irish)

 Campaign to promote Irish made goods could have had the effect of reducing imports
 The fact the proportion of non-Irish goods sold was irrelevant
 The potential effect to reduce imports was key

COMMISSION v IRELAND (Irish Souvenirs)

 Non-Irish made jewellery purporting to be Irish-style had to have “foreign” written on it

 Court held that consumers didn’t need to know where the product had come from
 Nothing to stop domestic manufacturers marking a product with place of manufacture

The EU now has a scheme to protect agricultural products and food stuffs which originated from a
particular place and are exclusively identified as being so. This is covered by Regulation 1151/2012:

i) Protected Geographical Indication (PGI) – protects geographical source (Scottish beef)

ii) Protected Destination of Origin (PDO) – protects manufacturing method (Blue Stilton)

This protection is granted to products whose quality or characteristics are essentially attributable
to their geographical origin. Examples include: Parma ham, feta cheese, Melton Mowbray pork pies,
Kalamata olives, Dortmunder bier and Newcastle brown ale.

So, distinctly applicable measures include:

a) Imposing additional requirements on imported goods (Firma Denkavit)

b) Restricting channels through which goods can be imported (Dassonville)
c) National rules giving preference to domestic goods (Buy Irish, Irish Souvenirs)

2.2.4. Case law on indistinctly applicable MEQRs

Dassonville made no mention of indistinctly applicable measures, all a measure had to do was hinder
trade. But we needed a case to confirm that an indistinctly applicable measure was prohibited if it
restricted trade – Cassis de Dijon was this case.

CASSIS DE DIJON

Facts:
  Germany had a minimum alcohol requirement of 25% on fruit liqueur
 French liqueur only had 15%
 This restricted the import of French liqueur into Germany
 This was an MEQR

Principle:

i) Mutual recognition
 Goods sold legally in one State should can be sold in another State without restriction
 Removal of a dual burden – a company having to comply with two different regulatory
regimes for selling their products in two different States
 If every MS had a different regime, this would severely limit trade
ii) Mandatory requirement defence (indistinctly applicable measures only)
 Discussed later

3. DEFENCES I – ARTICLE 36 DEROGATIONS

Article 34 prohibits non-fiscal barriers on trade. Article 36 allows for derogations:

i) Public morality
ii) Public policy
iii) Public security
iv) Protection of health and life of humans, animals or plants
v) Protection of national treasures possessing artistic, historic or archaeological value
vi) Protection of industrial and commercial property

Derogations needs to be objective and proportional to the objective sought; they can’t just be relied
upon to derogate from arbitrary discrimination.

3.1.Public Morality

R v HENN AND DARBY

 Trade in pornography was illegal in the UK and could be justified on public morality grounds.
 MS are free to set their own standards on public morality.

CONEGATE v HM CUSTOMS AND EXCISE

 UK tried to ban German imports of love-love dolls

 There was a legal trade of these dolls in the UK
 So banning the imports on public morality grounds wasn’t OK

3.2.Public Policy (narrowly construed)

R v THOMPSON

 Only successful public policy case

 UK banned export of silver coins
 Society needed to protect right to mint coinage
 Ban on exports went in hand with domestic ban on the coins being melted down within the UK
 Right to mint coinage was a fundamental interest of society (core theme of the freedoms when
public policy is invoked)
CULLETT v CENTRE LECLERC TOULOUSE
 This case failed for public policy
 Involved a French petrol station charging below the minimum price for petrol
 See later under public security

3.3.Public Security

CAMPUS OIL v MINISTER FOR INDUSTRY AND ENERGY

 This is the leading case on public security derogation from Article 34
 Irish State nationalised the only Irish oil refinery to prevent it from closing
 If it had close, all refined petroleum would have been imported from abroad
 Importers of petroleum had to buy at least 35% of oil from the new refinery (to keep it open)
 Clear MEQR as it restricted imports of oil but it was held to be OK as oil is a key resource for
public services and presence of a national refinery subverted worries when in a crisis

COMMISSION v GREECE
 Another oil case
 The Greeks basically controlled the domestic oil market by ensuring distributors
procurement programmes had to be signed off by the State and had to buy majority of their
oil from the State
 This, the Greeks argued, was essential to guarantee regular supply of petroleum products by
ensuring public refineries were able to dispose of their products and remain in operation
 Court found that Greece had failed to prove the distributors wouldn’t not be able to dispose
of their product at competitive prices without these measures
 So the measures were prohibited as they were disproportionate

CULLETT v CENTRE LECLERC TOULOUSE

 French petrol station charging below the statutory minimum for petrol
 French government argued the minimum was needed to protect from public chaos which
would ensue if local retailers were faced with lots of competition
 The Court rejected this argument; the French hadn’t shown they couldn’t deal with any
threats or disruptions which might arise

3.4.Protection of life and health of humans, animals and plants

This is the most invoked derogation but only applies in the absence of harmonising measures (e.g.
BSE and foot and mouth disease) which EU institutions often adopt. Objective evidence must be
provided that allows the Court to scrutinise that the measure is actually crucial to protect.

COMMISSION v GERMANY (Beer Purity)

 West Germany tried to invoke the derogation to warrant its ban on additives in beer
 It failed because other MS used the additives which had been proven not to pose a threat
 The ban was disproportionate and therefore not necessary
Principle: Objective evidences needs to be provided.

CRIMINAL PROCEEDINGS AGAINST SANDOZ

 There was a ban on the sale of vitamin bars in Holland without authorisation
  There was inconclusive scientific evidence as to the exact point excessive consumption of
vitamins became harmful
 The derogation was allowed
Principle: If scientific evidence is inconclusive, the derogation may be allowed.

COMMISSION v UNITED KINGDOM (Imports of Poultry Meat)

 The UK buckled under media pressure and put a restriction on imported poultry products
 This the government argued was to control the spread of Newcastle disease in poultry
 Court found that the real reason for the ban was to protect British producers against a surge of
imports over Christmas
Principle: The reason for the restriction in trade must be genuine.

CRIMINAL PROCEEDINGS AGAINST BLUHME

 Maintaining population of Laeso bee
 Ban on keeping other types of bees was ok to maintain biodiversity
 Bee was under genuine threat
Principle: Maintaining biodiversity by protecting a species was OK

PREUSSENELEKTRA v SCHLESWAG
 Derogation may extend to environmental protection
 German legislation required electricity undertakings to purchase minimum priced renewable
energy from their local area
 The policy was designed to protect health and life of humans, animals and plants so was valid
 Article II TFEU required for environmental protection
Principle: Environmental protection is an OK derogation.

AKLAGREN v MICKELSON AND ROOS

 This is also related to environmental protection
 Discussed later

3.5.Other Derogations
 Protecting intellectual property
 Domestic trader imposing IP rights to exclude importing traders’ presence in domestic market
 Strictly monitored (detail beyond the scope of the course)

4. DEFENCES II: MANDATORY REQUIREMENTS FOR

INDISTINCTLY APPLICABLE MEQRs
 Only available in relation to MEQRs which are indistinctly applicable
 Established in original Dassonville judgements and confirmed in Cassis de Dijon
 Outlined as:
i) Effectiveness of fiscal supervision
ii) Protection of public health
iii) Fairness of commercial transactions
iv) Defence of the consumer
I.e. A restriction can be justified when it meets one of the above (but it needs to be proportional to
the objective).
CASSIS DE DIJON
Remember the facts here: the German’s had imposed a minimum ABV on fruit liqueur of 25%. The
French’s was 15-25%. This impeded the import of French fruit liqueur into Germany.

 German’s first argument was PUBLIC HEALTH: consumption of lower alcohol content beverages
induces alcohol tolerance which is bad for public health.
 This was rejected as lots of other low alcohol content products were available on the market
 Second argument was PROTECTING CONSUMERS: the German’s argued that imposing a
minimum protected customers from distributors were would try to pass off cheap alcohol as
fruit liqueur.
 This was rejected on similar grounds – labelling requirements could ensure consumers knew
what they were buying.
 The minimum ABV was therefore a MEQR.

Principle: Mandatory requirements need to have sufficient force to justify the imposition of a MEQR.

CRIMINAL PROCEEDINGS AGAINST GILLI

 Mandatory requirements can only justify indistinctly applicable MEQRs
 Distinctly applicable MEQRs cannot be justified by mandatory requirements (Irish Souvenirs)

4.1. Applying the Cassis de Dijon principles

 It’s important for traders to have mutual recognition of products to prevent the dual burden
from arising. Remember we have four types of mandatory requirement that can be quoted to
get out of an indistinctly applicable MEQR: effectiveness of fiscal supervision, consumer
protection, public health, fairness of commercial transactions.

WALTER RAU
Facts:
 A Belgian law which required margarine to be in cubes imposed a dual burden on a trader trying
to establish themselves in Belgium.
 All margarine sold in Belgium was domestic.
 Belgium argued CONSUMER PROTECTION to protect Belgians against buying butter by accident.
 The Court rejected this somewhat ridiculous argument – told them to use labels instead
Principle: A measure needs to be proportional to the objective sought

CINETHEQUE v FEDERATION NATIONALE DES CINEMAS FRANCAIS

 French law banned sale/hire of all videos within first year of release
 This was to protect cinemas and their profitability
 Applied equally to domestic and imported films
Principle: When a measure is proportional to achieving its aims, the MEQR can be justified.
PROTECTING CULTURE could be an additional MEQR justification.

COMMISSION v DENMARK (Disposable Beer Cans)

 Protection of the environment
 The Danish required drinks cans to be produced in a standard size for recycling purposes
 Mutual recognition presumption was successfully rebutted
SCHMIDBERGER v REPUBLIK OSTERREICH
 Protection of fundamental rights
 Austrian government allowed a one day environmental protection demonstration on Brenner
motorway (a major trade route)
 A one day closure was proportional and a justified restriction on FMOG

PREUSEENELEKTRA v SCHLEWAG
 Court refused to acknowledge mandatory requirements could apply to distinctly applicable
MEQR (ignored AG’s advice)
 Instead it classed it as an Article 36 derogation under protection of humans, animals and plants

5. SELLING ARRANGEMENTS
These are rules which concern who sells the product and when, where and how the seller goes
about selling it.
5.1.Early Cases and Adoption of Keck Test
CRIMINAL PROCEEDINGS AGAINST OOSTHOEK
Facts:
 Dutch law prohibited free gifts from being offered or provided within commercial activity
 Oosthoek tried to give away dictionaries with one of its products
 The Dutch law was held to be an MEQR as it could restrict imports of products
 But it was justifiable on the grounds of consumer protection
 Could lead to misleading consumers on prices and distort the market for free products

CINETHEQUE v FEDERATION NATIONALES DES CINEMAS FRANCAIS

 French law which prohibited the sale of films within one year of their release
 Ban was proportionate way of achieving the protection cinematographic production

TORFAEN BOROUGH COUNCIL v B&Q

 UK law prohibited trading on Sundays
 B&Q started trading on Sundays
 They argued the ban hindered imports from being sold
 The Court agreed and left it to the national court to decide if measure was a proportional
response on sociocultural grounds

STOKE ON TRENT & NORWICH v B&Q

 Ban on Sunday trading was proportionate restriction which could be justified on sociocultural
grounds

Court was heavily criticised for ruling that these cases involved MEQRs in the first place so it
responded. Basically traders were taking advantage of Article 34 by saying anything which might
hinder the sale of an imported product (even if domestic products were equally hindered) would
be an MEQR.

CRMINAL PROCEEDINGS AGAINST KECK AND MITHOUARD

 Supermarket managers broke French law of selling goods at a loss
 They argued that the French law contravened Article 34
 The use of Article 34 had got out of control
 Court introduced the:
KECK TEST:
Selling arrangements wouldn’t be considered an MEQR if they fulfilled the following conditions:

i) They apply to ALL traders in the national territory

ii) They effect in the same manner in law and in fact the marketing of domestic and
imported products

i.e. if a selling arrangement complied with the above conditions then it would NOT be an MEQR. The
KECK test has been used in subsequent cases.

CRIMINAL PROCEEDINGS AGAINST TANKSTATION

 Dutch law which ensured closure of petrol stations at night applied to ALL traders
 It satisfied the Keck test so NOT an MEQR

PUNTO CASA v SINDALO DEL COMMUNE

 This also regarded Sunday trading rules

So, we no longer need to prove that Sunday trading law were an MEQR which could be justified
under sociocultural grounds; under the Keck test they wouldn’t be an MEQR.

5.2.Selling arrangements which fall within Article 34 under the Keck test
Remember, there are two conditions to comply with in order to dodge Article 34 breaches:
i) Must apply to ALL traders
ii) Must affect the marketing of domestic and imported products in the same manner in
fact and in law

FACHVERBAND DER BUCH v LIBRO HANDELSGELLSSCHAFT

Facts:
 Austrians set minimum price for German books
 They tried to argue under the Keck test that the law applied to all books
 But part of the law applied ONLY to German books, so Keck test was failed
 They could still argue under a mandatory requirement
 But they failed with the argument of protection of national treasures (cultural diversity) and
protection of cultural objects failed for proportionality
Principle: Even where the Keck test fails, one can still quote mandatory requirements.

Keck has been found to have had an impact on advertising restrictions

DE AGOSTINI
Facts:
 Swedish law banned TV advertising to kids under 12 and misleading adverts on skincare
 It was unclear whether the second part of the Keck test was satisfied
 The ban on TV ads may have a greater effect on importers
 De Agostini argued that TV advertising was the only way to penetrate the Swedish market
Principle: Discriminating arrangements could be considered an MEQR. It would be prohibited unless
it could be justified by a mandatory requirement.
GOURMET INTERNATIONAL PRODUCTS
Facts:
 Swedish ban on advertising of beer in magazines, TV and radio unless magazine was sold at the
point of purchase with the beer
 Held to be an indistinctly applicable MEQR because Swedish brands would be less effected than
foreign brands trying to enter the market
 It left it to the national court to decide if there was a public health derogation

These Swedish cases can be contrasted with Herbet Karner.

HERBERT KARNER v TROOSTWIJK

Facts:
 Austrian ban on auction notices to large groups of people which states goods are from an
insolvent estate
 Aimed to prevent misleading consumers on potential prices of insolvent based goods
 Held to be lawful as it complied with Keck and so wasn’t an MEQR (so didn’t attract Article 34)
 Adverts only banned to large number of people and of the fact goods originate from insolvent
estate
 Didn’t prohibit other adverts or favour domestic products over imported ones

5.3.Distinguish product requirements from selling arrangements

 Promotional materials on the packaging can be confusing

VEREIN v MARS
Facts:
 Mars sold ice creams 10% large and labelled the end with 10% flash label
 Argued by Germans that it made it seem like the extra 10% was free
 Mars argued that the prohibition on its packaging would be an MEQR
 The court held that the restriction was a product requirement
 If Mars were forced to change their packaging they would incur an additional cost
 So Mars were OK, they could keep the packaging

FAMILIAPRESS v BAUER
Facts:
 Austrian law prevented big money prizes being offered in newspapers
 This was to protect small publishers that couldn’t afford to offer such prizes
 Held to be a product requirement because it would appear in the magazine itself
 Court of Justice left it to the national court to decide whether protecting the diversity of the
press was proportional to the ban

5.4.Conclusion on Selling Arrangements

 Indistinctly applicable rules on selling arrangements prima facie fall outside of Keck
 But even if a rule is about selling, it will still be prohibited by Article 34 if it favours domestic
products over imported ones (De Agostini and Gourmet Internationale)
 Laws which concern the products themselves will fall within Article 34 even if they relate to sales
promotions which appear on or in the product itself (Mars and Familiapress)
 6. RESTRICTIONS ON THE USE OF PRODUCTS
 Wide range of restrictions fall under Article 34
 What about actual product use?

NATIONALE RAAD v BELGIUM

 Lots of restrictions could be a MEQR
 Anything which prohibited goods being marketed, acquired, offered, put on display, kept,
prepared, transported, sold, disposed of for valuable consideration or free of charge, imported
or used would be an MEQR

COMMISSION v ITALY (Trailers)

 MEQRs not confined to measures which have a discriminatory object or effect and indistinctly
applicable product requirements
 Anything which hinders trade could be a MEQR
Facts:
 Italian law which banned the use of two, three and four wheel motorcycle trailers was found to
be an MEQR
 Consumers would be less likely to buy the trailers (which may be imported)
 But the ban could be justified on the grounds of road safety
Principle: Legislation which impedes the use of products and therefore the sale can be an MEQR

AKLAGAREN v MICKELSON AND ROOS

 Swedish ban on certain jet ski routes – could only be used in designated areas
 Would have had detrimental impact on jet ski sales as consumers wouldn’t be able to use them
for their intended purpose
 But the ban on the routes could be justified on the ground of environmental protection – an
Article 36 derogation and a mandatory requirement
 Derogation under protection of health and life of humans, animals and plants
Principle: Legislations which impedes the use of products can be an MEQR which can admittedly be
justified as a mandatory requirement

Also in Mickelson and Roos the AG warned against characterising product use as an MEQR
- Could lead to all sorts of daft things such as not buying a car because you couldn’t go x speed
down a motorway in it

7. RESTRICTIONS ON EXPORTS – ARTICLE 35

 MS are less likely to have restrictions on exports because they generally encourage exports
 But Article 35 prohibits distinctly applicable MEQRs where the measure doesn’t match up to
goods sold domestically

PROCURER BESCANON v LES SIEURS BOUHLIER

 French law required exports on watches to be authorised by export licences which certified their
quality
 No such law existed for watches sold in France
 Held that this was arbitrary discrimination
Principle: Any restriction on exports need to be imposed on domestically sold products

The Court has been reluctant to apply Article 35 to indistinctly applicable measures

GROENVELD v PRODUKTSCHAP
Facts:
 Dutch law prohibited manufacturers from having horsemeat in stock to ensure it wouldn’t be
exported to countries where it was banned
 Applied to all manufacturers irrespective of whether their meat was to be marketed within
Holland or exported
Principle: The Court held that Article 35 will only apply to measures which have “as their specific
object or effect” the restriction of exports which confer an advantage to the domestic market or
domestically produced goods

Article 34 v Article 35 (barriers to imports v barriers to exports)

 Dual burden is obviously non-existent for exports, it’s something which happens on importation
 Exports generally don’t incur the same disadvantage from the imposition of indistinctly
applicable measures by the MS from which they are exported
 This is because all domestic producers of the product need to comply with the measure too
(bearing in mind they are probably a domestic producer too if they’re exporting)

But indistinctly applicable measures imposed by the MS of export can place exporters at a
disadvantage in rare circumstances

CRIMINAL PROCEEDINGS AGAINST GYSBRECHTS

Facts:
 Belgian company in online sales collected credit card details to protect from non-payment
 Belgian law prohibited collecting card details before the seven working day time period during
which Belgian consumers were allowed to withdraw from a distance sales contract
 Belgian prohibition deprived traders of an efficient way to guard against non-payment
 Indistinctly applicable but it was an obstacle to FMOG because it was more difficult to bring legal
proceedings (for non-payment) in another State
 Prohibition on taking money before seven day period justified by consumer protection
 But the prohibition on the mere collection of card details not justifiable
 It went beyond what was necessary to protect the consumer

Conclusion: Article 34 v Article 35

 So, exports need to be placed at an actual disadvantage before the indistinctly applicable
measures will be treated as an MEQR
 This is different from Article 34, which will attract measures which merely impede upon access
to the market (irrelevant whether they place the same burden or not – Italian trailers)
 Different approaches because of the dual burden effect