European Union Law Free Movement of Goods: Quantitative Restrictions

Quantitative Restrictions

Question: ! What are “quantitative restrictions” and why do

they matter?

Answer: !  They involve non-pecuniary restrictions. By

contrast, customs duties and internal taxes (which are also prohibited) involve pecuniary charges.

Article 34 TFEU: !  “Quantitative restrictions* on imports and all

measures having equivalent effect shall be prohibited** between Member States.”

* “[M]easures which amount to a total or partial restraint of, according to the circumstances, imports, exports or goods in transit” (Case 2/73 Geddo v Ente Nazionale Risi [1973] ECR 865). Applies to measures by Member States – not private parties.

** There are no exceptions aside from those in Art. 36 TFEU

Article 35 TFEU: !  “Quantitative restrictions on exports, and all

measures having equivalent effect, shall be prohibited between Member States.”

Article 36 TFEU: !  “The provisions of Articles 34 and 35 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 prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.”

* Must be proportional & least restrictive to attain goal. This is an exhaustive and complete list – these are only exceptions that can justify direct or indirect discrimination that otherwise violates Art. 34.

** Does not include consumer protection

Question:

! What are “measures having equivalent effect to quantitative restrictions” or MEQR?

Former Directive 70/50: Examples of MEQRs:

!  Maximum/minimum price for imports

!  Less favourable prices for imports

!  Increased costs for imports

!  Different requirements for packaging, composition, identification, size, weight for imports

!  Preferences for purchase of domestic goods

!  Limiting publicity for imports v domestics

!  Stocking requirements for imports that are more difficult than for domestics

!  Requiring importers to have agent in territory

Case 8/74 Procurer du Roi v Dassonville [1974] ECR 837 !  Facts

!  Procedural History

!  Holding

!  Rationale

Dassonville: !  “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.” (para. 5)

! MEQR

Dassonville: !  “In the absence of a Community system

guaranteeing for consumers the authenticity of a product’s designation of origin, if a Member State takes measures to prevent unfair practices in this connection, it is however subject to the condition that these measures should be reasonable and that the means of proof required should not act as a hindrance to trade between Member States and should, in consequence, be accessible to all Community nationals”

! “Rule of Reason”

Exs. of Article 34 in Action: !  Barred Italian rule requiring imported cars to

register in a way that was longer and more complicated than registration for domestic cars (Case 154/85 Commission v Italy [1987] ECR 2717)

!  Barred UK rule that required imports to be marked with country of origin (Case 207/83 Commission v UK [1985] ECR 1201)

!  Barred Irish rule requiring jewelry and souvenirs made in other MS to be marked as “foreign” (Case 113/80 Commission v Ireland [1981] ECR 1625)

More Exs. of Art. 34: !  Setting minimum price for imported books sold in

Austria but without any such minimum for domestic publishers (Case C-531/07 Fachverband)

!  Requiring a roadworthy test for an imported car that has never been used so cannot possibly be damaged (Case 50/85 Schloh v Auto Controle Technique [1986] ECR 1855)

! Applies to actions by Member States – not private parties – but this can include a MS failing to act against private parties, e.g. French farmers threatening these rights in strawberries case

Case 249/81 Commission v Ireland [1982] ECR 4005 (“Buy Irish”)

!  Facts

!  Procedural History

!  Holding

!  Rationale

Exs. of Art. 35 in Action: !  Barred French rule that required quality check for

exported watches but not for domestic watches (Case 53/76 Procureur de la Republique Besancon v Bouhelier [1977] ECR 197)

!  Barred Belgian law that required suppliers to get payment card number from consumers in distant locations because this had greater effect on goods leaving Member State for export (Case C-205/07 Lodewijk Bysbrechts and Santurel Inter BVBA [2008] ECR I-9947)

Exs. of Art. 36 in Action:

!  UK’s ban on poultry imports from MS where poultry not slaughtered when Newcastle disease detected resulted in French turkeys denied entry up to Christmas (as urged by UK poultry traders) not justified under Art. 36 – public health – because disguised restriction on trade (Case 40/82 Commission v. UK [1982] ECR 2739).

!  UK’s bar on pornography imports from Holland justified under Art. 36 - public morality (Case 34/79 R v Henn and Darby [1979] ECR 3795)

!  UK’s ban on imported blow-up “love love dolls” from Germany not justified under Art. 36 – public morality – because no prohibition in UK on making or selling dolls (Case 121/85 Conegate Ltd v Commissioners of Customs and Excise [1986] ECR 10007)

More Exs. of Art. 36:

!  Italian law prohibiting motorcycles from towing trailers (even when they are designed to do so) justified under public safety (Case C-110/05 Commission v Italy [2009] ECR I-519)

!  “Public policy” can serve as a justification under Art. 36 but ECJ rejected it when France failed to show how “public order” (law and order) would be jeopardized without minimum retail prices for fuel (Leclerc decision)

!  “Public security” justified Ireland’s requirement that importers of petrol buy 35% of requirements from state-owned refinery to safeguard Ireland’s “existence” and “energy source” (Case 72/83 Campus Oil Ltd v Minister for Industry and Energy [1984] ECR 2727)

More Exs. of Art. 36: ! Marketing of German muesli bars with vitamins

can be barred in Holland on grounds of “public health” due to concerns over excess vitamin consumption as long as restriction is proportional (Sandoz decision)

Indistinctly Applicable Rules

What Are “Indistinctly Applicable” Rules? !  Rules about how to market a product (e.g.

based on presentation, size, shape, size, weight) that have a restrictive effect on free trade that outweighs any benefits

! Art. 34 TFEU bars “indistinctly applicable” rules that obstruct free trade, i.e., imports, even if they do not directly discriminate

!  There is no equivalent bar for indistinctly applicable rules obstructing the freedom to export under Art. 35 TFEU –Art. 35 TFEU only bars direct discrimination

Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung fur Branntwein [1979] ECR 649 (“Cassis de Dijon”)

!  Facts

!  Procedural History

!  Holding

!  Rationale

Cassis de Dijon: !  Article 34 TFEU applies to rules that do not directly

discriminate against imports – and which apply without distinction to all products - but obstruct trade

!  Goods made in one MS should be admitted into another MS for sale unless the MS importing the goods has “mandatory requirements” that indirectly obstruct the imported goods. Any restrictions must be justified as reasonable measures – “rule of reason”.

!  Asserts mutual recognition of goods made in another MS

Cassis de Dijon: !  “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 recognized 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.”

“Mandatory Requirements”: !  Include: fiscal supervision; protection of public

health; fairness of commercial transactions; consumer protection; others. This is not an exhaustive list.

! May justify national rules that would otherwise violate Art. 34 TFEU. They are in addition to and separate from the justifications listed in Art. 36.

! Only for equally applicable measures that cause differential treatment. Do not apply to measures causing direct discrimination or indirect discrimination (although difference between indistinctly applicable requirements and indirect discrimination may be hard to discern).

Mandatory Requirements in Action:

!  Laws that forbid stores from selling products on Sundays have “objective justifications” in “public interest” to support economic and social policy of country and respect political and economic choices regarding opening hours (Case 145/88 Torfaen BC v B&Q plc [1989] ECR 3851)

!  French law banning sale/rent of movies within first year of release was objectively justified by French policy to encourage people to go to cinema (Cases 60 and 61/84 Cinetheque SA v Federation Nationale des Cinemas Francais [1985] ECR 2605)

Unsuccessful Attempts to Rely on “Mandatory Requirements”: !  France’s prosecution of importer of Edam cheese

containing 34.3% fat instead of 40% fat not justified by “mandatory requirements” (Case 286/86 Ministere Public v Deserbais [1988] ECR 4907)

!  Italy prosecution of importers of apple vinegar from Germany not made from wine fermentation not justified by “mandatory requirements” because proper labeling could warn customers (Case 788/79 Italian State v Gilli and Andres [1980] ECR 2071)

!  Germany’s law that “bier” only used for drinks made of barley, hops, yeast, water not justified for consumer protection because other ways, e.g., “suitable labels” for protecting consumers aside from total ban on imports (Case 178/84 Commission v Germany [1987] ECR 1227)

Proportional ! Any objective justifications based on mandatory

requirements must be proportional

!  In the Mars decision [1995] ECR I-1983 – Germany’s ban on imported Mars ice cream bars with packaging that said “+10%” was not justified as consumer protection where there was mere possibility that consumers would be misled and total ban on these imports from France was not proportional.

Selling Arrangements

Question: ! What is a “selling arrangement” and why is it

important for EU law?

Case C-267 and 268/91 Criminal Proceedings against Keck and Mithouard [1993] ECR I-6097

!  Facts

!  Procedural History

!  Holding

!  Rationale

Keck: !  Involved a method of sales promotion (ie

reselling goods at a price lower than their cost) that was prohibited in France

Keck: !  “[T]he application to products from other Member

States of national provisions restricting or prohibiting certain selling arrangements is not such as to hinder directly or indirectly, actually or potentially, trade between Member States within the meaning of the Dassonville judgment (Case 8/74 [1974] ECR 837) so long as those provisions apply to all affected traders operating within the national territory and so long as they affect in the same manner, in law and fact, the marketing of domestic products and of those from other Member States. … Such rules therefore fall outside the scope of Article [34] of the Treaty.” (Paragraphs 16 - 17)

Keck: To recap, selling arrangements fall outside Art. 34 TFEU as long as they:

!  (i) apply equally to all traders operating within the national borders and

!  (ii) affect in the same manner, in law and fact, the marketing of domestic products and products from other Member States

Exs. of “Certain Selling Arrangements” Falling Outside Art. 34:

!  Italian law closing retail outlets on Sundays

!  Rule barring pharmacies from advertising certain products

!  Types of premises on which goods may be sold

! Ways in which a product is marketed, e.g. advertisements or free offers

!  Swedish law barring TV ads at kids under 12 (De Agostini decision)

Case C-405/98 Konsumentombudsmannen v Gourmet International Products AB [2001] ECR I-1795

!  Swedish ban on alcohol ads in magazines, radio, TV violated Art. 34 TFEU

! Did not fall outside Art. 34 under Keck because they affected foreign products more than domestic products

!  “traditional social practices” and “local habits and customs” caused Swedes to prefer domestic alcohol (e.g., Absolut)

Analysis

Ways to Analyze a Situation: 1.  Identify the national measure

2.  Identify which freedom is at stake – free movement of goods, free movement of services or establishment, free movement of capital, free movement of workers – or determine whether the situation falls outside the four freedoms, e.g., a selling arrangement under Keck

3.  If one of the freedom sis impeded by the national measure, is there any justification for the restriction?

4.  If so, is the restriction proportionate to the end sought to be achieved? Is there a way of achieving the same end which is less restrictive?

Next … !  Free movement of capital on Tuesday, February

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