Free Movement of Goods

The next 3 blog posts are going to be centered around the 4 fundamental freedoms of the EU: goods, services, establishment and workers. These are 4 key principles of the EU and it is important to understand how they work. All EU citizens are influence by this, whether its because of the food and products in the shop we buy, or going on holiday, working around the EU and operating a business around the EU. There are in many ways interlinked and have similar provisions government them and the rules on how a member state can restrict these fundamental freedoms at times. All will be explored in due course.

Free Movement of Goods is governed in Article 34 TFEU which prohibits Quantitative restrictions (QR’s) and Measures Equivalent to Quantitative Restrictions (MEQR’s). In short, this is asking whether there is a restriction.

 

Is there a restriction?

A quantitative restriction is where a member state will put a total ban on a product or place partial bans on products for instance only allowing a certain number of those products into the country- called a quota.

MEQR’s are much more board. They are defined in the case of Dassonville as ‘measures that actually or potentially, directly or indirectly hinder intra-community trade’. This is a much wider definition and includes any restrictions that could in come way affect trade within the EU.

The first point of call is to identify if there is a restriction. This is where we identify whether it is a MEQR or a QR. The next thing to identify is whether it is Distinctly Applicable or Indistinctly Applicable.

 

Distinctly Applicable

Distinctly applicable restrictions are ones that only apply to foreign companies. They are specifically checking all imported goods, or non-UK goods ect. This distinctly puts alien businesses at a disadvantage as only they have to jump through extra hoops in order to be able to trade with that member state.

For example, in Dassonville, extra packaging requirements were required on all foreign produced goods. This was distinctly applicable only to foreign businesses

The ‘Buy Irish campaign’ was a campaign backed by the government in Ireland to only buy Irish products. This was specifically alienating foreign businesses and hindering their sales as they were not being promoted as the Irish products were which was distinctly applicable.

In the Commission v Germany, German companies were awarded a ‘quality’ sticker on all their products but this was only available to German companies, therefore being ‘directly discriminate’ on foreign companies.

 

Indistinctly Applicable

Indistinctly applicable restrictions are ones that are more indirectly discriminate on foreign goods. They apply the provision to all companies that operate in their country, however the conditions are more favorable towards their own national companies.

In Commission v UK it was indirectly applicable as a country of origin label was required on all products. Because the UK do not product a lot of products, and the ones they do product usually were labeled, this was indirectly discriminate.

In the Walter Rau case, Belgium margarine was required to be manufactured in a round shape instead a block as it was mostly done around the world. This was indirectly discriminate as the companies in Belgium were used to this requirement, however it would cost a lot more for other manufacturers to make their product to a specific shape for each country they sold too.

 

Is the restriction Lawful?

The next step is to ask whether the restriction can be justified. Article 36 TFEU has produced a list of justifications they may be used to restrict the free movement of goods in their country. This can be applied to Distinctly applicable measures as well as Indistinctly measures.

Article 36- “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.”

Public Morality can only be justified if the member state feels that there is a serious risk to public morality if it was not restricted. For example, in Henn and Darby, the UK was allowed to restrict pornographic material being imported. Also, in the case of Conegate regarded a product that was manufactured in the country in which other similar products were sold was held to be arbitrary and not able to be restricted. This case concerned life size dolls that were being manufactured within the UK.

Public Policy have a very high threshold that a member state will have to satisfy. The Omega test states that there must be a sufficiently serious risk, to a fundamental part of society. Also, the Thompson case, regarding the sale of gold coins, was held that there is a very high threshold in order to use public policy and that there was little they could actually find was justified under Public Policy.

Protection of health is a head which is also family hard to use. There must be a sufficiently serious and imminent threat to be able to use this as a justification. It must not be arbitrary such as in the UHT Milk case where all imported milk must have a certificate stamp on it. This was arbitrary as there was no current issue. It may have been different if they wished to prevent the spread of a specific disease carried in ilk from that country, but this was not the case and could not be used to justify.

The last sentence is extremely important of article 36. It identifies that no restriction shall be allowed, whether it can be justified on any grounds under article 36 if it is a only a disguised restriction. Under no circumstances can a restriction be justified if it was only an attempt to disguise a restriction for example the Beer Purity Laws in Germany- they were never an attempt to protect the health of their citizens, they merely wanted the German companies to have the run of the market in their country.

 

Cassis Justifications

The case of Cassis de Dejon is one of the most famous EU cases. This case was about the alcohol Crème du Cassis attempted to be excluded from sale in Germany as its alcohol content was less than the other liquors sold in Germany.

From this case, 2 principles were developed to help the courts decide on whether they should allow the justification: mutual recognition and the rule of reason.

Mutual recognition is the idea that if the sale of a product is allowed din other member states, then there are very limited reasons that they should not be available in that member state too. For example, cassis was also sold in France, therefore it would not be fair to restrict the sale in Germany and not France.

The Rule of reason is a principle that is used to identify mandatory requirements of the state. There were several category’s that were identified in this case which would potentially allowed to restrict if they were mandatory requirements of the state:

  • Fiscal supervision
  • Defence to the consumer
  • Fairness in commercial transactions
  • Public health, morality, policy and security (A36)
  • Environmental or cultural protection

These justifications will only apply indistinctly applicable measures

 

Proportionately

One of the underlaying principles of the EU is that everything must be proportionate. The ECJ will not allow any restriction if it is not proportionate, regardless whether it is distinctly applicable or indistinctly applicable. For example, even if in the case of Walter Rau, it was possible to benefit the public on health grounds, it is not as proportionate as perhaps putting a label on the product, instead of each company having to change the way they manufacturer.

 

 

Selling Arrangements

There became a point where the claims being made against the state for restricting the free movement of goods was too much. It went too far and any sort of limitation a state tried to impose, they were at risk for infringing the free movement of goods. Therefore, In the case of Keck, selling arrangements were created in order to allow the states to not restrict the sale of goods, but tell businesses how, when and where they could sell their products.

Keck did not define what a selling arrangement was, but it was developed in later case law that it was about the how, where and when certain products could be sold.

The proviso to Keck was that the restriction will not be MEQR’s if they apply to all traders within the national area and they are not discriminate in law or in fact.

For example, in the Commission v Greece, it was held that only allowing the sale of baby milk in pharmacies was a selling arrangement and therefore lawful.

In the case of Punta Casa, the Italian laws about trading on a Sunday were defined as selling arrangements

The case of Hundermund regarded Advertisement limits on certain products which was allowed to be a selling arrangement.

Keck also allows the member state the impose requirements of design, form, size, weight, composition, presentation, labeling and packaging, so long as it does not discriminate or is used to hinder intra community trade- as in Dassonville.

One example of this was the case of Clinique in Germany. They had to change their name to Linique, as in the German language Clinique was regarded as having therapeutic properties and it was not. This was a selling arrangement as it was about not allowing the consumers to assume the product was therapeutic.

Another example is that of Marz chocolate bars. There was a promotional sticker covering more than the actual % increase of size on the product. This was a selling arrangement as it was misleading the customer.

 

Harmonization of Products

This is only a small last point about harmonization directives and regulations. These are created in order to solve the disputes in regard to certain products and classes of product that member states have had disputes over. Unless the directive or regulation states that it allows amendments from national legislatures, it must remain untouched which is usually the case. If there is a harmonization law on that particular product, none of the justifications under cassis or article 36 will be allowed. Only the justifications that were expressly stated in the harmonization law. The purpose of harmonization directives and regulations are to eliminate differences and adopt common and equal EU standards (Article 115 TFEU)

 

By Woodrrow Cox

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