Free Movement of Goods

Question 1

Art 3 TFEU

Answer 1

• 1. The Union’s aim is to promote peace, its values and the well-being of its peoples…
• 3. The Union shall establish an internal market. It shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment. It shall promote scientific and technological advance. It shall combat social exclusion and discrimination, and shall promote social justice and protection, equality between women and men, solidarity between generations and protection of the rights of the child. It shall promote economic, social and territorial cohesion, and solidarity among Member States. It shall respect its rich cultural and linguistic diversity, and shall ensure that Europe’s cultural heritage is safeguarded and enhanced….

My thoughts: from this we can say that the internal market is not an end in itself, but it is clear that it lies at the heart of the EU’s activities.

Question 2

Art 26(2) TFEU

Answer 2

• The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties.

Question 3

Art 26(2) TFEU

Economic rationale

Answer 3

Economic rationale: the internal market is designed to ensure competition, leading to technical innovation from firms seeking a comparative advantage and lower prices. The idea is that ultimately there will be better goods at lower prices —a large benefit to consumers.

Question 4

Art 26(2) TFEU

Implementation of measures designed to regulate the internal market

Gebhard (1995) -

Answer 4

a case on the freedom of establishment: “It follows… from the Court’ s case-law that national measures liable to hinder or make less attractive the exercise of fundamental freedoms guaranteed by the Treaty must fulfil four conditions:

1. they must be applied in a non-discriminatory manner;
2. they must be justified by imperative requirements in the general interest;
3. they must be suitable for securing the attainment of the objective which they pursue;
4. and they must not go beyond what is necessary in order to attain it”

Question 5

Imports: Art. 34 TFEU:

Answer 5

Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.

Question 6

Art. 35 TFEU

Answer 6

Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States

Question 7

Derogations: Art. 36 TFEU

Answer 7

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.

The fundamental idea here is balance: the articles are concerned with balancing: (i) impetus towards free trade; with (ii) accepting that MS retain a strictly defined competence to lawfully restrict free trade to protect certain important domestic interests. To make this more vivid: consider a country banning the import of porn in the interest of public morality.

Question 8

Quantitative restrictions

Answer 8

“measures which amount to a total or partial restraint of, according to the circumstances, imports, exports, or goods in transit.” C/273 Geddo v Ente [1973] ECR 865. This includes bans on imports and imposed quotas on imports.

Question 9

Measures having equivalent effect (MEQR’s)

Answer 9

“not only take the form of restraint described: whatever the description or technique employed, they can also consist of encumbrances having the same effect.” (Geddo). We need to consider what this means in more detail:
• Directive 70/50: this is no longer applicable, but continues to give some idea of the scope of MEQR’s. The directive identified two groups of such measures:
o Distinctly applicable measures (Art. 2 of directive): these do not apply equally to domestic and imported goods (e.g. they make importation more difficult / costly relative to domestic products) —e.g. higher standards for imported goods.
o Indistinctly applicable measures (Art. 3 of directive) these measures appear on their face to be equally applicable to domestic and imported goods, but the effect of the measure disadvantages imported goods by requiring them to satisfy a domestic set of rules for similar products —e.g. conditions on the packaging / composition of goods.

Question 10

ECJ in Dassonville

Answer 10

• here the ECJ give an effect based definition — i.e. if a national measure has a prejudicial effect to the internal market, unconcerned with intention: “all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade.”

Question 11

CAT 1: PHYSICAL BARRIERS TO TRADE AND DISCRIMINATORY PRACTICES

Answer 11

This is the category of measures that fall under Art. 2 of Directive 70/50. This type of barrier was characteristic of the earlier cases, where relatively easy-to-identify interferences with trade integration were attacked. This category does not apply to goods with distinctive characteristics that may be national or regional in origin —e.g. Stilton Cheese, Parma Ham etc.

Question 12

CAT 1: PHYSICAL BARRIERS TO TRADE AND DISCRIMINATORY PRACTICES

Imposing additional requirements on imported goods

Case 251/78 Firma Denkavit Futtermittel GmbH v Minister fur Ernahgrung (1979

Answer 12

the requirement that imported goods should be inspected was held to breach Art. 34 because of the delays in inspection process and increased transport costs.

Question 13

CAT 1: PHYSICAL BARRIERS TO TRADE AND DISCRIMINATORY PRACTICES

National rules giving preferences to domestic goods

Commission v Ireland (1980)

Answer 13

Facts: The “Irish Souvenirs” case. Ireland passed a law requiring imported jewellery bearing certain motifs or characteristics to be sold as souvenirs to bear the word ‘foreign’ if not produced in Ireland.

ECJ: “
• The orders concerned in the present case are not measures which are applicable to domestic products and to imported products without distinction but rather a set of rules which apply only to imported products and are therefore discriminatory in nature” [9]
• The measure was discriminatory because “the essential characteristic of the souvenirs in question is that they constitute a pictorial reminder of the place visited which does not by itself mean that a souvenir, as defined in the orders, must necessarily be manufactured in the country of origin.” [15]
• Would be nothing wrong with leaving “domestic manufacturers to take appropriate steps such as affixing, if they so wished, their mark of origin to their own products of packaging.” [16]

Question 14

CAT 1: PHYSICAL BARRIERS TO TRADE AND DISCRIMINATORY PRACTICES

Restricting channels for the distribution of imported goods

Case 8/74 Procureur de Roi v Dassonville [1974] ECR 837

Answer 14

ECJ held that a Belgian requirement that importers of Scotch whisky possess a British certificate of authentication was incompatible with Art. 34 TFEU. Belgians had imported Scotch whisky from free circulation in France. The rule favoured direct importers over traders importing Scotch whisky into Belgium from other MS in which the goods were already in free circulation. This ‘channelled’ trade and distorted the market.
• [5] A distorting measure is: “all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade.”
• [6] “In the absence of a Community system guaranteeing for consumers the authenticity of a product’s designation of origin, if a MS takes measures to prevent unfair practices in this connexion, 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 MS and should, in consequence, be accessible to all Community nationals.”
• [7] Art 36 does not apply to arbitrary discrimination or disguised restrictions on trade
• [8] “That may be the case with formalities, required by a MS for the purpose of proving the origin of a product, which only direct importers are really in a position to satisfy without facing serious difficulties.”

Question 15

CAT 1: PHYSICAL BARRIERS TO TRADE AND DISCRIMINATORY PRACTICES

Licences

International Fruit Company v Produktschap voor Froenten en Fruit (No 2) (1971):

Answer 15

Facts: Court asked to consider whether Art. 34 applies to “national legislative provisions prohibiting imports and exports without a licence but which in fact are not applied because exemptions are granted from the prohibition and, there this is not so, because the licence is always granted on request”

ECJ:
• Noted that: “Apart from the exceptions for which provision is made by Community law itself those provisions preclude the application to intra-Community trade of a national provisions which requires, even purely as a formality, import or export licences or any other similar procedure”
• More permissive approach to lawfulness of controls over trade with third countries outside the EU

Question 16

CAT 2: PROTECTIONIST EFFECTS FROM NATIONAL LAW DISPARITIES

Answer 16

This is the category of measures that fall into Art. 3 of Directive 50/70 (indistinctly applicable rules). Even though there might be no explicit reference to the origin of goods, disparities between national laws may themselves generate measures having equivalent effect within the meaning of Art. 34 TFEU.

Question 17

CAT 2: PROTECTIONIST EFFECTS FROM NATIONAL LAW DISPARITIES

Cassis de Dijon

Answer 17

This was a crucial development, since it concerns controlling national regulatory autonomy in establishing technical standards in so far as it may impede European market building.

Facts: A German law specified a minimum alcohol level of 25% for certain spirits including cassis (made in France). The law was indistinctly applicable because it applied to both domestic and imported liqueurs, but had the effect of impeding the importation of French cassis which had alcohol content between 15% and 20%.

ECJ: accepted that the German requirement amounted to an MEQR.
• 14: “In practice, the principal effect of requirements of this nature is to promote alcoholic beverages having a high alcohol content by excluding from the national market products of other MS which do not answer that description.
• It therefore appears that the unilateral requirement imposed by the rules of a MS of a minimum alcohol content for the purposes of the sale of alcoholic beverages constitutes an obstacle to trade which is incompatible with [Art 34]
• There is therefore no valid reason why, provided that they have been lawfully produced and marketed in one o the MS, alcoholic beverages should not be introduced into any other MS; the sale of such products may not be subject to a legal prohibition on the marketing of beverages with an alcohol content lower than the limit set by national rules.”

Question 18

CAT 2: PROTECTIONIST EFFECTS FROM NATIONAL LAW DISPARITIES

Minimum fat requirement in cheese

Case 286/86 Deserbais (1988)

Answer 18

Facts: French legislation restricted use of the name ‘Edam’ to choose with a minimum fat content of 40%. D imported cheese from Germany where it was lawfully produced with a lower fat content. D marketed the cheese as ‘Edam’ and was prosecuted for unlawful use of a trade name. D argued Art 34 provided him with a complete defence to the charge.

ECJ:
• [12] “It would be incompatible with [Art 34]… and the objectives of a common market to apply such rules to imported cheeses of the same type where those cheeses have been lawfully produced and marketed in another MS under the same generic name but with a different minimum fat content. The MS into which they are imported cannot prevent the importation and marketing of such cheeses where adequate information for the consumer is ensured.”
• 13: Question may arise if same rule must be applied where a product under a name is so different (in terms of composition or production) from products generally known by the name that it cannot be regarded as falling within the same category. But this case is not such a case. NB: there could be a case where a such a rule was legitimate.

Question 19

CAT 3: SELLING ARRANGEMENTS

Answer 19

This is where obstacles to commerce diminish the overall volume of trade, but do not affect imports more than domestic products. Such measures are not caught by Art. 34.

Question 20

CAT 3: SELLING ARRANGEMENTS

Background: Sunday Trading cases

Case 145/88 Torfaen BC v B&Q plc (1989)

Answer 20

Facts: B & Q was prosecuted for violating the Shops Act 1950 by allowing its retail premises to be open on Sunday other than for limited range of permitted transactions under that Act. B&Q argued that ‘Sunday trading’ depressed sales, including sales of imported products.

ECJ:
• 11: “National rules prohibiting retailers from opening their premises on Sunday apply to imported and domestic products alike. In principle, the marketing of products imported from other Member States is not therefore made more difficult than the marketing of domestic products.”
• But failed to differentiate with Cassis de Dijon… 13: Art 34 “must be interpreted as meaning that the prohibition which it lays down does not apply to national rules prohibiting retailers from opening their premises on Sunday where the restrictive effects on Community trade which may result therefrom do not exceed the effects intrinsic to rules of that kind”

This led to confusion because the ECJ treated the Sunday trading rules as MEQRs falling within the Art 34 structure, but left it to national courts to decide whether or not the restriction on trade was necessary and proportionate.Confusion at national level followed, where different English and Welsh courts adopted different views of the compatibility of Sunday trading with the Treaty.

Question 21

CAT 3: SELLING ARRANGEMENTS

Background: Sunday Trading cases

Case C-169/91 Stoke on Trent and Norwich City Councils v B&Q (1992):

Answer 21

17: Art 34 “is to be interpreted as meaning that the prohibition which it lays down does not apply to national legislation prohibiting shops from opening on Sundays.”

The importance of these cases was that in the decade preceding them, the court allowed invocation of Art. 34 where the application of rules and their consequential burdens were felt equally by both domestic and international goods. Weatherill: the ECJ got these cases ‘spectacularly wrong’ by finding that they could be within the scope of Art. 34.

Question 22

CAT 3: SELLING ARRANGEMENTS

The rule in Keck

Answer 22

Facts: K and M resold goods at a loss. This violated French law forbidding such practices. K and M submitted the law restricted the volume of sales of imported goods by depriving them of a method of sales promotion [Art 34].

ECJ: any restrictive effect plainly effected all goods, not just imports. [Outside scope of Art 34]
• [13] “Such legislation may … restrict the volume of sales, and hence the volume of sales of products from other Member States, in so far as it deprives traders of a method of sales promotion. But the question remains whether such a possibility is sufficient to characterize the legislation in question as a measure having equivalent effect to a quantitative restriction on imports.”
• [14] “In view of the increasing tendency of traders to invoke [Art 34] of the Treaty as a means of challenging any rules whose effect is to limit their commercial freedom even where such rules are not aimed at products from other Member States, the Court considers it necessary to re-examine and clarify its case-law on this matter.”
• [16] “… contrary to what has previously been decided, the 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, so long as those provisions apply to all relevant traders operating within the national territory and so long as they affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States.”

Thus, two conditions were laid down to prove a measure is a selling arrangement outside the scope of Art. 34: (i) the measure applies to all affected traders operating within the national territory; and (ii) the measure affects in the same manner in law and in fact the marketing of domestic and imported products.

Thus, as in Keck, matters satisfying the two requirements are not the concern of EU law and lie in the hands of the local regulator.

Question 23

CAT 3: SELLING ARRANGEMENTS

Examples of selling arrangements

Cases C-401 & 402/92 Criminal Proceedings against Tankstation ‘t Heukstevof and JBE Boermans (1994):

Answer 23

Dutch rules required the closure of all petrol stations at night, and applied to all traders operating in the national territory—these were not caught by Art 34. The rules affected domestic and foreign producers in the same way in law and fact.

Question 24

CAT 3: SELLING ARRANGEMENTS

Examples of selling arrangements

Case C-71/02 Herbert Karner v Troostwijk (2004)

Answer 24

An Austrian restriction on the advertising of auctions of goods bought from insolvent firms, which had the aim of preventing consumers being given a misleading impression about potential prices, was seen as a selling arrangement and not caught by Art 34.

Question 25

CAT 3: SELLING ARRANGEMENTS

Complications in application —advertising

Answer 25

These cases disprove the 2003 assertion of the Commission that “the court has completed its case law” in this area.

Question 26

CAT 3: SELLING ARRANGEMENTS

Case C-405/98 Konsunemtombudsmannen v Gourmet Int’l Products (2001)

Answer 26

Facts: the Swedish government restricted the advertising of alcoholic drinks on radio and TV and in magazines and other publications, unless the magazine was distributed solely at the point of sale of the beverage. Gourmet published a magazine that reached members of the public and that contained advertisements for alcohol in breach of the Swedish legislation.

ECJ:
• This type of selling arrangement had to be considered within Art 34 structure of analysis. The arrangement impeded access by foreign producers to the alcoholic beverage market more than domestic producers because consumers would be more familiar with domestic goods. Thus the arrangement was under Cassis category. National court left to determine if it was justifiable.
• “Even without its being necessary to carry out a precise analysis of the facts …, which it is for the national court to do, the Court is able to conclude that, in the case of products like alcoholic beverages, the consumption of which is linked to traditional social practices and to local habits and customs, a prohibition of all advertising directed at consumers in the form of advertisements in the press, on the radio and on television, the direct mailing of unsolicited material or the placing of posters on the public highway is liable to impede access to the market by products from other Member States more than it impedes access by domestic products, with which consumers are instantly more familiar.”

Question 27

CAT 3: SELLING ARRANGEMENTS

Case C-239/02 Douwe-Egberts [2004] ECR I-7007

Answer 27

Facts: The ECJ was asked whether the Belgian law, which provides for an outright ban of any references to slimming on foodstuffs labelling, infringes EU law including the principles of the free movement of goods.

ECJ:
• [52] “… the possibility cannot be ruled out that to compel a producer to discontinue an advertising scheme which he considers to be particularly effective may constitute an obstacle to imports”.
• [53] “Moreover, an absolute prohibition of advertising the characteristics of a product is liable to impede access to the market by products from other Member States more than it impedes access by domestic products, with which consumers are more familiar” (Gourmet International Products).

The point is not that any rule affecting advertising or other methods of boosting sales is within the scope of Art. 34 —rather, it seems to be that one must carefully examine the impact of a particular challenged national measure on the market which it affects:

Question 28

CAT 3: SELLING ARRANGEMENTS

Herbert Karner v Troostwijk (2004)

Answer 28

Here there was not a total ban on advertisements (there was an alternative means of advertising available) therefore access to the domestic market for importers was not made more difficult.

Question 29

CAT 3: SELLING ARRANGEMENTS

A-Punkt Schmuckhandels v Claudia Schmidt “Schmidt” [2006]

Answer 29

“the fact that a marketing method is apparently more efficient and profitable is not a sufficient reason to assert that the national provision prohibiting it is caught by the prohibition laid down in [Art 34]. Such a provision constitutes a measure having equivalent effect only if the exclusion of the relevant marketing method affects products from other Member States more than it affects domestic products”

Question 30

CAT 3: SELLING ARRANGEMENTS

Application to restrictions on the use of products

Oliver and Enchelmaier

Answer 30

the limiting effect of Keck may be undone if the court is too quick to allow review of these types of national measures.

The Court seems to apply Keck very literally —i.e. it only applies to restrictions concerning sale and not use. But the reasoning is opaque and no clear rationale is given. In Keck the ECJ noted ‘the increasing tendency of traders to challenge national rules’ and drew a distinction between product requirements and certain selling arrangements (CSAs). Product requirements would always fall within the scope of EU law and have to be justified but not so CSAs. So long as the CSAs applied equally to all traders in the national territory and had the same effect on all traders in law and in fact, they fell outside the scope of the Treaty.

Question 31

CAT 3: SELLING ARRANGEMENTS

Case C-110/05 Commission v Italy [2009] - ECR I-519

Answer 31

Facts: Italy prohibited motorcycles, mopeds etc. from towing trailers, even those specifically designed for use with such vehicles. Commission argued this breached Art 34.

ECJ: this law fell within Art 34 but justified on grounds of public safety [69].
• 33: Quoted Dassonville para 5 (see ablove)
• 34: Art 34 “reflects the obligation to respect the principles of non-discrimination and of mutual recognition of products lawfully manufactured and marketed in other MS, as well as the principle of ensuring free access of Community products to national markets.”
• 35: In absence of harmonisation “obstacles to the free movement of goods which are the consequence of applying, to goods coming from other MS where they are lawfully manufactured and marketed, rules that lay down requirements to be met by such goods constitute measures of equivalent effect to quantitative restrictions even if those rules apply to all products alike.”
• 36: Contrasts with Keck but gives no reasons at all justifying the contrast.
• 37: “Consequently, measures adopted by a MS the object or effect of which is to treat products coming from other MS less favourably are to be regarded as measures having equivalent effect to quantitative restrictions”

Question 32

CAT 3: SELLING ARRANGEMENTS

Case C-142/05 Aklagaren v Mickelsson, Roos [2009] ECR I-4273


Answer 32

Factually similar to the Italian Trailers case. Swedish rules restricted the use of jet-skis on waterways that are not generally navigable.
ECJ: was within Art 34, but justified by need to protect the environment. ECJ left Sweden some leeway in application, but the regulatory choices can be supervised under Art 34.
• [26] “Even if the national regulations at issue do not have the aim or effect of treating goods coming from other Member States less favourably, which is for the national court to ascertain, the restriction which they impose on the use of a product in the territory of a Member State may, depending on its scope, have a considerable influence on the behaviour of consumers, which may, in turn, affect the access of that product to the market of that Member State (Commission v Italy, paragraph 56)”
• [27] “Consumers, knowing that the use permitted by such regulations is very limited, have only a limited interest in buying that product (see to that effect, Commission v Italy, para 57).”
• [28] “In that regard, where the national regulations for the designation of navigable waters and waterways have the effect of preventing users of personal watercraft from using them for the specific and inherent purposes for which they were intended or of greatly restricting their use, which is for the national court to ascertain, such regulations have the effect of hindering the access to the domestic market in question for those goods and therefore constitute, save where there is a justification pursuant to [Art 36] or there are overriding public interest requirements, measures having equivalent effect to quantitative restrictions on imports prohibited by [Art 34].”

Question 33

CAT 3: SELLING ARRANGEMENTS

Spalding case note on Trailers and Roos:

Answer 33

• In the 1990s the European Court of Justice (ECJ) established a distinction between the product requirements and certain selling arrangements in the case of Keck and Mithouard.
• A few years ago in Trailers the ECJ declined to extend Keck to user arrangements and declared that a measure will be classified as a measure having equivalent effect to a quantitative restriction if it hinders access to the market.
• In the Trailers the ECJ found that the rule did not discriminate with regard to origin but in fact only imports were affected as no trailers were manufactured in Italy. The ECJ identified three situations where a rule could be regarded a MEQR.
1. Where the object/effect of the measure is to treat products from other member states less favourably than domestic products.
2. When a measure requires goods lawfully made in another member state to meet another condition even if it applies to all products indiscriminately.
3. Any other measure which hinders the access of products originating in other member states to the market.
• The third situation applied in Trailers as the prohibition on the use of the product would have a big impact on consumer behaviour which will affect demand for the product. However this could be justified under the mandatory requirement of road safety.
• A second user arrangement case emerged soon after. In Mickelsson and Roos —here ECJ did not even refer to Keck but went straight to the definition of a MEQR provided in the Trailers case. It found such a limitation would hinder access to the market as it would deter consumers from buying the product but it could be justified on the grounds of the protection of health and life of plants and animals and environmental protection.
• It would appear that although Keck applies where the question is as to certain selling arrangements, it does not apply to restrictions on the use of products. Instead, here, we get the ‘considerable influence over the consumer’ test.

Question 34

JUSTIFICATIONS IN THE RESTRICTION OF THE FREE MOVEMENT OF GOODS

General

Art. 36 TFEU

Answer 34

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. THIS APPLIES TO CAT 1 AND CAT 2 —NOT TO CAT 3.

The effect of the Treaty is thus not an out and out declaration that trade barriers are legal per se. The key is that they must be shown to be justified and the burden of proof is on the regulator (i.e. the member state). The aim of the internal market is not remorseless deregulation— rather it is to achieve a balance between the EU’s aim to establish an internal market and the national regulatory autonomy of MS.

Question 35

JUSTIFICATIONS IN THE RESTRICTION OF THE FREE MOVEMENT OF GOODS

Art. 36 for Cat 1 and Cat 2

1. Public morality

Henn and Darby (1979

Answer 35

Concerned a UK ban on the import of obscene films and magazines. Although this constituted a obstacle to the internal market simpliciter Art. 36 could be relied on by the UK:
“ it for each MS to determine in accordance with its own scale of values and in the form selected by it the requirements of public morality.” Thus, there was no unlawful discrimination because there was no lawful trade of such goods at all in the UK

Question 36

JUSTIFICATIONS IN THE RESTRICTION OF THE FREE MOVEMENT OF GOODS

Art. 36 for Cat 1 and Cat 2

1. Public morality

Conegate v HM Customs & Excise Commissioners (1986

Answer 36

The UK sought to prevent the import of life-size inflatable ‘love-love’ dolls from Germany. ECJ held that the derogation was not available to the UK. The same goods could be lawfully manufactured in the UK. The ban arbitrarily discriminated against imported goods.

Question 37

JUSTIFICATIONS IN THE RESTRICTION OF THE FREE MOVEMENT OF GOODS

Art. 36 for Cat 1 and Cat 2

2. Public policy

R v Thompson (1978

Answer 37

This is construed very narrowly, having been invoked successfully only once in an Art. 35 (export of goods) case:

UK banned export of silver coins to prevent them being melted down or destroyed. There was also a ban in the UK on such coins being melted down or destroyed. ECJ accepted the ban stemmed from the need of the state to protect the right to mint coinage, which involved a fundamental interest of the state.

Question 38

JUSTIFICATIONS IN THE RESTRICTION OF THE FREE MOVEMENT OF GOODS

Art. 36 for Cat 1 and Cat 2

1. Public policy

Cullett v Centre Leclerc Toulouse (1985)

Answer 38

Leclerc group started selling petrol at prices below those set by French law. Competitor brought proceedings against Leclerc on basis of French law. Leclerc argued the minimum price law infringed Art 24 as it allowed authorities to manipulate prices and prevent importers entering market. French government argued public policy derogation applied on account of threat to public order and security that would result from local retailers if faced with unrestricted competition. ECJ rejected the argument — the French government had not proved it could not deal with these threats or possible disruptions using traditional means at its disposal.

Question 39

JUSTIFICATIONS IN THE RESTRICTION OF THE FREE MOVEMENT OF GOODS

Art. 36 for Cat 1 and Cat 2

3. Public security

Campus Oil v Minister for Industry and Energy (1984):

Answer 39

Ireland is completely dependent on imports for petroleum supply. It required importers to buy 35% of requirements from a state-owned oil refinery at prices the Irish government fixed. ECJ: this was an MEQR but the restriction was necessary on grounds of public security. Because of the exceptional importance of petroleum products as an energy source, an interruption in supplies could seriously affect public security. The restriction allowed Ireland to maintain its own oil refining capacity and was proportional.

Question 40

JUSTIFICATIONS IN THE RESTRICTION OF THE FREE MOVEMENT OF GOODS

Art. 36 for Cat 1 and Cat 2

4. Protection of health and life of humans, animals, or plants

Answer 40

This is the most frequently invoked derogation. It applies in the absence of harmonised measures —e.g. to deal with a crisis such as BSE or foot and mouth. The ECJ demands objective evidence, however, if it is to allow for a derogation.

Question 41

JUSTIFICATIONS IN THE RESTRICTION OF THE FREE MOVEMENT OF GOODS

Art. 36 for Cat 1 and Cat 2

4. Protection of health and life of humans, animals, or plants

Case 178/84 Commission v Germany “Beer Purity” case [1987]

Answer 41

The German government banned the marketing of beer containing all additives on the ground that the long-term effect of additives was not known. ECJ examined the scientific evidence and found there was little evidence that additives presented a risk to public health. I.e. good example of the requirement of objective evidence.

Question 42

JUSTIFICATIONS IN THE RESTRICTION OF THE FREE MOVEMENT OF GOODS

Art. 36 for Cat 1 and Cat 2

4. Protection of health and life of humans, animals, or plants

If the scientific evidence is actually inconclusive, the ECJ will allow MS to decide if the degree of health protection is required:

Santoz (1983)


Answer 42

Santoz (1983)
Dutch authorities refused to grant authorisation for the import of muesli bars with
added vitamins from Germany. ECJ accepted the dearth of scientific evidence about vitamins meant that the Dutch restriction was justified.

Question 43

JUSTIFICATIONS IN THE RESTRICTION OF THE FREE MOVEMENT OF GOODS

Art. 36 for Cat 1 and Cat 2

4. Protection of health and life of humans, animals, or plants

Arbitrary measures will not be tolerated:

Commission v UK (1982)

Answer 43

The UK banned the import of poultry products from MS shortly before Xmas in 1981. ECJ held this was a disguised restriction on trade. The measures were hastily introduced to coincide with Xmas. Government had reacted to UK turkey producers’ fear of imports from France. There were no genuine health reasons for the restriction.

Question 44

JUSTIFICATIONS IN THE RESTRICTION OF THE FREE MOVEMENT OF GOODS

Art. 36 for Cat 1 and Cat 2

4. Protection of health and life of humans, animals, or plants

derogation has been applied broadly —i.e. to allow environmental regulations:

Case C-379/98 PreussenElektra v Schhleswag [2001]

Answer 44

German law required electricity distribution undertakings to purchase at fixed minimum prices electricity produced from renewable energy sources in their area of supply in Germany. ECJ: the legislative policy was justified as it was designed to protect the health and life of humans, plants and animals. Renewable energy reduces greenhouse gas emission. (73) Art 11 TFEU requires environmental protection to be integrated into the definition and implementation of other Community policies. (76)

Question 45

JUSTIFICATIONS IN THE RESTRICTION OF THE FREE MOVEMENT OF GOODS

Art. 36 for Cat 1 and Cat 2

4. Protection of health and life of humans, animals, or plants

NB: Sometimes lack of harmonisation at Community level justifies MS in making their own determinations in interest of citizen health:

Case 53/80 Eyssen [1981] ECR 409

Answer 45

Facts: Netherlands manufacturer produced cheese for sale domestically and in other MS containing an additive (nisin) that was illegal in the Netherlands only for products intended for sale on the domestic market.
• 10: No uniform rules on nisin amongst MS.
• 11: “In view of this disparity of rule it cannot be disputed that the prohibition by certain MS… is of such a nature to affect imports of that product from other MS where… the addition of nisin is… permitted and that it for that reason constituted a measure having an effect equivalent to a quantitative restriction.”
• 12: Studies “have not as yet enabled absolutely certain conclusions to be drawn regarding the maximum quantity of nisin which a person may consume daily without serious risk to his health” because “the assessment of the risk connected with the consumption of the additive depends upon several factors of a variable nature” e.g. dietary habits in a particular MS. Each MS prescribes maximums based on dietary habits of its citizens in relation to other products they might consume which contain nisin too.
• 14: “The difficulties and uncertainties inherent in such an assessment may explain the lack of uniformity in the national laws of the MS… and at the same time justify the limited scope which the prohibition of the use of the additive in a given product… has in certain MS.” The Netherlands law makes an assessment fro Dutch citizens, but allows export of more nisin so other MS can determine their own relevant conclusions.
• 15: Directive explicitly allows MS to make their own nisin determinations.
• 16: “Whilst it has the effect of hindering trade between MS in the products concerned [the national legislation] is included amongst the measures which Art 36 of the Treaty permits MS to adopt on rounds of the protection of health of humans and for that reason it escapes the prohibitions.”

Question 46

Special justifications applying to category 2

1. The presumption of mutual recognition

Case 120/78 Cassis de Dijon [1979] ECR 649 “

Answer 46

There is therefore no valid reason why, provided they have been lawfully produced and marketed in one of the MS, alcoholic beverages should not be introduced into any other MS”

The principle is that if goods have been lawfully produced and marketed in MS 1, they can in principle be sold in MS 2 without further restriction. There is thus a presumption that rules which imposed a dual burden on the producer, who would have to satisfy MS 1 and MS 2’s rules would infringe Art. 34. Thus, the MS would have to rely on either an Art. 36 derogation, or the ‘rule of reason’ (see below —also developed in Cassis).

Question 47

Special justifications applying to category 2

1. The presumption of mutual recognition

Verein gegen Unwesen in Handel und Gewerbe Koln v Mars (1995)

Answer 47

A sales promotion in which Mars sold ice cream bars 10% larger than usual size and marked the wrappers “10%” was challenged by consumer authorities in Germany on grounds that it created impression that 10% increase was free and the graphic made the bar seem bigger than it was. Mars challenged this. ECJ: as the bars were being sold throughout the EU they must also be sold in Germany on the basis of the dual burden rule. Court concluded the wrappers were part of the product. Manufacturer would otherwise have to change wrappers at the border or have a second production line for Germany.

Question 48

Special justifications applying to category 2

2. The rule of reason

Answer 48

The Rule of Reason is essentially the proposition that a proportionality exercise must be performed by the Court to determine whether the effects of Member State legislation on the free movement of goods is justified in light of the legislation’s stated goals. Following Cassis a MS can point to the following as justifications as to why a derogation is justified: (i) effectiveness of fiscal supervisions; (ii) protection of public health; (iii) fairness of commercial transactions; (iv) defence of the consumer.

Question 49

Special justifications applying to category 2

2. The rule of reason

Case 120/78 Cassis de Dijon [1979] ECR 649


Answer 49

The German government sought to justify the minimum alcohol requirement in two ways:

1. the rule helped prevent alcoholism by restricting low-alcohol beverages that induced alcohol tolerance.
2. necessary for protection of consumers: those with less alcohol enjoyed a competitive advantage since they could price lower.

ECJ at para 8 mentioned mandatory requirements which went beyond Art 36 and could save an MEQR: “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.”
However, this was not the case here:
1. Wrong because other low-alcohol content products were widely available on the German market.
2. Wrong because labelling requirements could ensure consumers were aware of the alcohol content of products and so make an informed decision about whether to purchase more expensive high alcohol spirits, or cheaper lower alcohol spirits.

The ambit of the ‘rule of reason’ or ‘mandatory requirements’ is limited —they can only be pleaded where an indistinctly applicable MEQR is in question (and the principle of proportionality must be adhered to).

Further, they are not exhaustive (the ECJ said ‘in particular’ in Cassis) —one other factor that can be pointed to is the protection of the environment. However, the ECJ is not prepared to endlessly expand their scope.

Question 50

Special justifications applying to category 2

2. The rule of reason

Case C-379/98 PreussenElektra v Schhleswag [2001] ECR I-2099

Answer 50

ECJ: simply ignored the recommendation of AG Jacobs that the mandatory requirement of environmental protection should be capable of being invoked for distinctly applicable measures. AG Jacobs had based his recommendation on the contention that the ECJ had relied on the mandatory requirement in 4 earlier cases which in his views were doubtedly indistinctly applicable. The ECJ instead held that the measure in question here was distinctly applicable and so the Art. 36 derogation to protect the health and life of humans, animals and plants applied

Question 51

Special justifications applying to category 2

3. Rule of reason: case law on the protection of the economic interests of consumers

Answer 51

The following cases show the scope of the Cassis justifications and the Court’s choice of priorities.

There is a relationship to EU competence on this particular ground —a justified barrier to trade means that the EU has deferred to EU regulatory autonomy, on this ground it means that the MS are potentially better placed to act in the interests of consumers (which is the purpose of the internal market). I.e. market integration is justified, initially, on the basis of consumer interest and the MS measures in question are justified on the grounds of consumer protection.

Question 52

Special justifications applying to category 2

3. Rule of reason: case law on the protection of the economic interests of consumers

Case 178/84 Commission v Germany “Beer Purity” case [1987] ECR 1299

Answer 52

Facts: Concerned the German prohibition on marketing beer lawfully produced in other MS if it failed to comply with German beer purity laws, which applied to domestically produced beer too.

ECJ:
• Challenge 1: products could not be marketed as ‘Bier’ unless brewed using only barley, hops, yeast and water.
o 29: “It is not contested that the application of [the German law] to [lawfully produced non- compliant] beers from other MS… is liable to constitute and obstacle to their importation into Germany”
o 30: “Accordingly it must be established whether the application of that provision may be justified by imperative requirements relating to consumer protection.”
o 31: German government argument that the German law “is essential in order to protect German consumers because, in their minds, the designation ‘Bier’ is inseparably linked to the beverage manufactured solely from [the 4 ingredients].”
o 32: “Consumers’ conceptions which vary from one MS to the other are also likely to evolve in the course of time within a MS. The establishment of the common market is, it should be added, one of the factors that play a major role in that development, Whereas rules protecting consumers against misleading practices enable such a development to be taken into account [the German legislation] prevents it from taking place.”
o 33: In other MS corresponding designation to ‘Bier’ are “generic designations for a fermented beverage manufactured from malted barley” whether on its own or with rice and maize.
o 34: Thus German designation ‘Bier’ and equivalents in other MS may not be restricted to beers manufactured in accordance with the German law.
o 35: Proportionality - “It is admittedly legitimate to seek to enable consumers who attribute specific qualities to beers manufactured from particular raw materials to make their choice in the light of that consideration. However… that possibility may be ensured by means which do not prevent the importation of products which have been lawfully manufactured and marketed in other MS and, in particular, by the compulsory affixing of suitable labels giving the nature of the product sold. By indicating the raw materials utilized in the manufacture of beer such a course would enable the consumer to make his choice in full knowledge of the facts and would guarantee transparency in trading and in offers to the ‘public”
Challenge 2: concerned additives and public health - see above

Question 53

Special justifications applying to category 2

3. Rule of reason: case law on the protection of the economic interests of consumers

Case C-441/04 A-Punkt Schmuckhandels v Claudia Schmidt “Schmidt” [2006] ECR I-2093

Answer 53

Facts: Concerned a prohibition on doorstop sales of silver jewellery in Austria.

ECJ:
• 27: “consumer protection may constitute a justification for the prohibition at issue …, on the two-fold condition that the prohibition is appropriate to ensure the attainment of the objective pursued and does not go beyond what is necessary to attain that objective.”
• 29: “It will also be necessary in the course of that review to take account of the specific features associated with the sale of silver jewellery in private homes, in particular the potentially higher risk of the consumer being cheated due to a lack of information, the impossibility of comparing prices or the provision of insufficient safeguards as regards the authenticity of that jewellery and the greater psychological pressure to buy where the sale is organised in a private setting.”
• 30: Art 34 “does not preclude a national provision by a MS prohibits in its territory the selling of, and collecting of orders for, silver jewellery in a doorstep-selling situation where such a provision applies to all relevant traders in so far as it affects in the same manner, in law and in fact, the marketing of domestic products and that of products from other MS.
• It is for the national court to ascertain whether… the application of the national provision is liable to prevent the access to the market of products from other MS or to impede that access more than it impedes the access to the market of domestic products and, if that is the case, to determine whether the measure concerned is justified by an objective in the general interest… and whether that measure is proportionate to that objective.”

Question 54

EXPORTS

Answer 54

Exports: Art. 35 TFEU: Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States.

There is less case law in this area because MS generally encourage exports. One crucial difference, however, is that an indistinctly applicable MEQR will not breach Art. 35.

Question 55

EXPORTS

Case 15/79 Groenveld [1979] ECR 3409

Answer 55

Facts: Dutch law prohibited all manufacturers of meat products from having horsemeat in stock, to ensure it would not be exported by accident to countries where it is banned. Indistinctly applicable, because it applied equally to all meat producers.

ECJ: not regulated by Art 35, even thought it might have effect of restricting exports of meat. It only applies to measures that have “as their specific object or effect the restriction on the patterns of export and thereby the establishment of a difference in treatment between the domestic trade of a MS and its export trade.”

NB: an MS in breach of Art. 35 can apply on Art. 36 derogations (above) but not the principles set out in Cassis.

Question 56

FREE MOVEMENT OF SERVICES

Treaty articles

Freedom to provide services: Art 56 TFEU

Answer 56

“Within the framework of the provision set out below, restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of MS who are established in a MS other than that of the person for whom the services are intended.”

This provision is broader than it might at first appear —applying to those who travel to other MS to receive services as tourists or to obtain medical treatment.

It is different from Art. 49 freedom of establishment, which requires a physical presence (e.g. an office) abroad.

Question 57

Limitations

Art 62 TFEU:

Answer 57

The provisions of Arts 51 to 54 shall apply.

Question 58

Art. 51 TFEU:

Answer 58

does not apply to activities which even occasionally are connected with exercise of official authorit

Question 59

Art. 52 TFEU

Answer 59

shall not effect measures taken for special treatment of foreign nationals in grounds of public policy, public security or public health.

Question 60

Art. 53 TFEU

Answer 60

to take it easier to self-employ, there will be mutual recognition of formal qualifications.

Question 61

Art. 54 TFEU

Answer 61

companies or firms in the EU shall be treated in the same ways as natural persons in the EU.

Question 62

Art. 57 TFEU

Answer 62

Art 56 only applies when none of the other three fundamental freedoms are relevant (capital, persons, goods)

Question 63

What is a service?

Art. 57 TFEU

Answer 63

“normally provided for remuneration” —industrial, commercial, activities of craftsmen, activities of the professions

Common examples of cross-border services: legal, insurance, financial, broadcasting etc. Prostitution, since it is for remuneration, was recognised as a service in Jany (2001). Abortion was recognised as a service in Grogan (1991).

Question 64

Rights granted by Art 56

Answer 64

• Right to move and reside to provide services
• Right to move and reside to receive services
• Right to operate as a business
Social rights

Question 65

Binsbergen test

Answer 65

The following test has been developed by the ECJ to determine whether a measure is justified:
• Condition 1: restriction must be adopted in pursuit of a legitimate public interest compatible with EU aims 

• Condition 2: the restriction must be equally applicable to person established within a state and must apply without discrimination 

• Condition 3: the restriction imposed must be proportionate to the need to observe the legitimate rules in question 


Question 66

Case 33/74 van Binsbergen [1974] ECR 1299

Answer 66

Facts: Claimant was a Dutch lawyer representing a client in court. He had moved to Belgium during the trial and his right to represent his client was challenged on the basis that only Dutch residents can represent clients in court.

ECJ: held this was prohibited by Art 56, but this would not be so if the rule applied to all individuals within a MS and could be justified to enforce rules of professional conduct. Here, public interest in proper administration of justice could be served by requiring an address to maintain the service rather than residence.
• “Taking into account the particular nature of the services to be provided, specific requirements imposed on the person providing the service cannot be considered incompatible with the treaty where they have as their purpose the application of professional rules justified by the general good… which are binding upon any person established in the State in which the service is provided, where the person providing the service would escape from the ambit of those rules being established in another MS.”
• “A MS cannot be denied the right to take measures to prevent the exercise by a person providing services whose activity is entirely or principally directed towards its territory of the freedom guaranteed in [Art 56] for the purpose of avoiding the professional rules of conduct which would be applicable to him if he was established within that State.”

Question 67

Justifications

Case C-76/90 Säger v Dennemeyer [1991] ECR 4221

Answer 67

Facts: D was a company based in the UK which specialised in patent renewals for clients based in Germany. S, a German-based patent agent, mounted a legal challenge arguing that D was providing legal services for clients without having a licence required by German law. D argued that the law hindered freedom to provide services.

ECJ: Germany in breach.
• Art 56 prohibited rules which ‘prohibit or otherwise impede’ the provisions of a service where the provider lawfully provides that service in another MS (like rule of reason in goods cases)
• MS can impose national rules limiting freedom to provide service, but they must be:
1. justified by imperative reasons relating to public interest 

2. indistinctly applicable (non-discriminatory) 

3. objectively necessary to ensure compliance with professional rules and to protect the recipients of business 

4. no more than is necessary to attain that objective. 


Measures must be non-discriminatory in law and in fact and not affect access of the person to market in goods and services of another country

Question 68

Case C-384/93 Alpine Investments BV [1995] ECR I-1141

Answer 68

Facts: In Holland cold-calling for financial services was banned. This was extended to other MS to protect the reputation of the Dutch financial sector (i.e. Dutch companies couldn’t cold call to other MS). AI argued it infringed Art 56.

ECJ: Art 56 was infringed but this was justified by the ‘consumer confidence’ defence.
• 36: The prohibition is not analogous to Keck.
• 38: “A prohibition such as that at issue is imposed by the MS in which the provider of services is established and affects not only offers made by him to addressees who are established in that State or move there in order to receive services but also offers made to potential recipients in another MS. It therefore directly affects access to the market in services in the other MS and is thus capable of hindering intra-Community trade in services.”
• 43: “Although the protection of consumers in the other MS in not, as such, a matter for the Netherlands authorities, the nature and extent of that protection does none the less have a direct effect on the good reputation of Netherlands financial services.”
• 44: “Maintaing the good reputation of the national financial sector may therefore constitute an imperative reason of public interest capable of justifying restrictions on the freedom to provide financial services.”
• 47-48: AI argues nonetheless the action is not necessary because MS of service provider should rely on controls in MS of receiver of call. But this is dismissed - the MS of the provider is better placed.
• 50-51: AI also argues that the action is not necessary because like in the UK the calls could be recorded. ECJ holds that just because a country does something more lenient, it doesn’t mean the stricter provision is necessarily disproportionate.
• 55: ECJ rejects that the measures are disproportionate.

Question 69

Case C-372/04 ex parte Watts [2006] ECR I-4325.

Answer 69

Facts: Mrs W suffered from arthritis. She wanted to go abroad for surgery. Initially she was on a year long waiting list in the UK. She underwent an operation in France for £4000.

ECJ: held that Mrs W was entitled to reimbursement of the cost of the operation from the NHS
• 119: “a refusal to grant prior authorisation cannot be based merely on the existence of waiting lists enabling the supply of hospital care to be planned and managed on the basis of predetermined general clinical priorities, without carrying out in the individual case in question an objective medical assessment of the patient’s medical condition, the history and probable course of his illness, the degree of pain he is in and/or the nature of his disability at the time when the request for authorisation was made or renewed.”
• 120: “It follows that, where the delay arising from such waiting lists appears to exceed in the individual case concerned an acceptable period having regard to an objective medical assessment of all the circumstances of the situation and the clinical needs of the person concerned, the competent institution may not refuse the authorisation sought on the grounds of the existence of those waiting lists, an alleged distortion of the normal order of priorities linked to the relative urgency of the cases to be treated, the fact that the hospital treatment provided under the national system in question is free of charge, the duty to make available specific funds to reimburse the cost of treatment provided in another MS and/or a comparison between the cost of that treatment and that of equivalent treatment in the competent MS.”

Question 70

FREE MOVEMENT AND FUNDAMENTAL RIGHTS

Issue: to what extent are the rules on free movement ‘porous’ i.e. influenced by fundamental rights?

Goods
Case C-112/00 Schmidberger v Austria [2003] ECR I-5659

Answer 70

In the following case both parties played the ‘fundamental rights’ card and fundamental rights were recognised as a legitimate restriction. Notice the emphasis on margin of discretion to balance the rights.

Facts: The Austrian government was the first MS government to use protection of fundamental rights as a justification for restricting a Treaty freedom when it allowed a one-day environmental demonstration to temporarily close a major trade route through Austria. The citizens’ fundamental freedom of expression and assembly was accepted as a justified restriction on the free movement of goods.

ECJ:
• 74: “since both the Community and its MS are required to respect fundamental rights, the protection of those rights is a legitimate interest which, in principle, justifies a restriction of the obligations imposed by Community law, even under a fundamental freedom guaranteed by the Treaty such as the free movement of goods.”
• 80: freedom of expression and assembly under ECHR is not absolute
• 81: “The interests involved must be weighed having regard to all the circumstances of the case in order to determine whether a fair balance was struck between those interests.”
• 82: “The competent authorities enjoy a wide margin of discretion in that regard. Nevertheless, it is necessary to determine whether the restrictions laced upon intra-Community trade are proportionate in the light of the legitimate objective pursued, namely… the protection of fundamental rights.”
• 87: “Various administrative and supporting arrangements were taken by the competent authorities in order to limit as far as possible disruption to road traffic”
• 88: “Moreover, it is not in dispute that the isolated incident in question did not give rise to a general climate of insecurity such as to have a dissuasive effect on intra-Community trade flows as a whole”
• 89: “The competent national authorities were entitled to consider that an outright ban on the demonstration would have constituted unacceptable interference with the fundamental rights of the demonstrators to gather and express peacefully their opinion in public.”
• Alternative solutions would have lead to more serious disruption of trade e.g. unauthorised demonstrations.

Question 71

FREE MOVEMENT AND FUNDAMENTAL RIGHTS

Case C-71/02 Herbert Karner [2004] ECR I-3025

Answer 71

Facts: An Austrian restriction on the advertising of auctions of goods bought from insolvent firms, which had the aim of preventing consumers being given a misleading impression about potential prices, was seen as a selling arrangement and not caught by Article 34.

ECJ:
• 51: “When the exercise of the freedom [of expression] does not contribute to a discussion of public interest and, in addition, arises in a context in which the Member States have a certain amount of discretion, review is limited to an examination of the reasonableness and proportionality of the interference. This holds true for the commercial use of freedom of expression, particularly in a field as complex and fluctuating as advertising….”
• 52: “In this case it appears, having regard to the circumstances of fact and of law characterising the situation which gave rise to the case in the main proceedings and the discretion enjoyed by the Member States, that a restriction on advertising as provided for in Paragraph 30 of the UWG is reasonable and proportionate in the light of the legitimate goals pursued by that provision, namely consumer protection and fair trading.”

Services

The following shows an acceptance of the State’s margin of discretion when fundamental rights clash in a free movement of services context.

Case C-36/02 Omega Spielhallen [2004] ECR I-9609

Facts: Germany imposed laws restricting the marketing of laser games that simulated killing human beings on the grounds that it undermined human dignity. O argued that this was contrary to the free movement of services (it was a UK version of the game used in Germany).

ECJ: held that the protection of human dignity is a principle of EU law, so that the derogation from article 56 was a proportionate and necessary one.
• The scope of the concept of public policy which allows derogation from the fundamental freedom cannot be determined unilaterally by each of the MS. Public policy may be invoked only if there is a genuine and sufficiently serious threat to a fundamental interest of society. MS have a discretion as to specific circumstances in which recourse to public policy is admissible.
• “The Community legal order undeniably strives to ensure respect for human dignity as a general principle of law. There can therefore be no doubt that the objective of protecting human dignity is compatible with Community law, it being immaterial in that respect that, in Germany, the principle of respect for human dignity has a particular status as an independent fundamental right.”
• The marketing restriction was a suitable and proportionate means of upholding human dignity, as regarded as needed on grounds of public policy by the competent national authorities in Germany.

Question 72

FREE MOVEMENT AND FUNDAMENTAL RIGHTS

Other contexts
Case C-438/05 Viking Line [2007] ECR I-10779

Answer 72

The following case concerned Art. 49 freedom of establishment. An employer submitted that the right to take industrial action is subservient to rights under Art. 49 and Art. 56 TFEU.

Facts: ECJ had to balance the EC Treaty fundamental right to strike against the right to free movement. A ferry operator argued that Art 49 TFEU protected it from pressure exerted by TUs aimed at deterring re-flagging.
ECJ:
• 75: Restriction on freedom of establishment justified only if it pursues a legitimate aim and is justified by overriding reason of public interest. Even so, it would need to be proportionate.
• 79: The community has not only an economic but also a social purpose.
• The referring court must examine: whether or not justifications exist: the protection of workers and improved living and working conditions are legitimate interests which, in principle, justify a restriction of one of the fundamental freedoms guaranteed by the Treaty. More specifically, the actions taken by the FSU could be justified if it were established that the jobs or conditions of employment of the members of that trade union employed by Viking Line were genuinely jeopardised or under serious threat, and if the collective action initiated by that union were suitable to ensure the achievement of the objective pursued and did not go beyond what is necessary to attain that objective.

Question 73

Harmonisation vs. Article 34

Answer 73

when you have exhaustive harmonisation, the harmonising measures take precedent — the problem goes outside the Art. 34 regime. In practice, when you have cases of pharmaceutical regulation / alcohol there is a lot of secondary law.

IF you want to have compulsory labelling, that has to be justified —if you require that in English then you have to justify it (e.g. health warnings on wine bottles in English) have to be justified under Art. 36.

For agricultural products, there is a special regime of control —e.g. EU certificates to determine if something is from a certain region then you get a monopoly on calling your product that name —e.g. champagne. We learn about the general regime, but people who deal with these cases have to deal with controversial issues of statutory interpretation.

If a directive tells you to do something, you don’t need to go to Art. 34.

Question 74

In Memoriam Keck

Answer 74

idea is that Art. 36 applies to MEQRs, the mandatory requirements rebut the presumption that something is an MEQR in the first place (before we even get to Art. 36). If you have a mandatory requirement, it means that the measure in question is not an MEQR at all. This gets around the problem that Art. 36 needs to be read strictly in light of the general principle of freedom of trade within the EU. This is useful if Art. 36 is to be read strictly — so no exceptions apart from list in Art. 36. On this framework, Keck tells us that there is a presumption that a measure concerning selling relations are not MEQRS — then using the two conditions in Keck you can reut that presumption. This is a good framework for thinking about these issues.

Question 75

Art. 34 and environmental concerns

Answer 75

Weatherill gets very exasperated with the case law in this area. In the Essent Belgium case AG Bot asks the Court to abandon the pretence that openly discriminatory measures can be justified with relation to Art. 36 (i.e. he wants the mandatory requirements to apply. However, when advising client in PQ it’s about suggesting what the court is going to do —so don’t be too speculative in arguments. It’s quite likely that environmental concerns will come up in the exam.
• Orthodox view is that environmental measures are not a grounds for justification on openly discriminatory measures. The Court gets around this by saying that openly discriminatory measures are MEQRs, i.e. they adopt a fiction here.

Question 76

Charter:

Answer 76

This is important —even the most recent cases (Flager from 2014) the court is willing to talk about possible justifications under the old framework of MEQRs, then (for dessert) the court will mention that these things are also covered by the charter. On this view, that Weatherill suggests, the charter doesn’t actually add anything. The court just adds it in. So, probably couldn’t base an argument in a PQ just from the charter —could add it at the end to say that the charter supports it. The court uses it as a rhetorical flourish and nothing else.

Question 77

Questions:

Question 1: ‘The Court of Justice considers it has achieved its objectives in Keck and is gradually and perhaps a little stealthily expanding the application of Article 34 TFEU (ex 28 EC) to selling arrangements’. Discuss.

Answer 77

The Commission said directly that the CJEU had ‘achieved its objectives in Keck’ —i.e. it seems to be that the case law in this area is closed post-Keck. Keck is one of the few situations where the court overrules precedent and wants to change the law —it’s significant against the background the Sunday Trading cases. The Court says that we have all we need in terms of the freedom of movement of goods and we can now close the gate to speculative challenges pushing at the boundary of EU law. The court wanted fewer cases on the docket.

The rule in Keck is that if it’s a selling arrangement (e.g. advertising) then the presumption is that it’s not an MEQR.

Gourmet Int’l Products: Court is relying on the ‘in fact’ point in the second limb of the Keck test to expand the case law in this area.

Question 78

sample Problem question 2:

Answer 78

G and BD: First question here: is there a trade barrier —is it a straight forward quantitative restriction under Art. 34. Then ask if it is an MEQR. Dassonville gives us a definition for MEQRs— go to Dassonville, is it something that can fit one of the recognised categories? No, it comes under Keck: it’s a selling arrangement. We have a presumption under Keck that it’s not (i.e. the ban on alcohol sales) an MEQR, so need to then figure out if the presumption is rebutted or not. Here, under limb (i) the ban applies to all affected traders, under limb (ii) need to consider in law and in fact it affects trade in the same way. Here it seems that in fact it affects international traders differently —under Gourmet the idea is that If you ban very effective ways of selling that this will affect foreign products more than domestic products. Doc Morris is an important case in pharmaceuticals. DC was internet selling drugs in the EU (pharma is a highly regulated and protectionist market in many countries across Europe —e.g. can only have one pharmacy for 5,000 people). One of these national trade organisations sued Doc Morris, the court ruled that for prescription drugs a ban on internet sales may be justifiable, but for non-prescription drugs it was discriminatory under Keck. How would a small pharmacy in the UK have access to the German market without internet sales? I.e. this is the best authority for bans on internet sales —a ban on internet sales is therefore an MEQR.

Then have to ask if it can be justified —is it Art. 36, or is it Art. 36 under RoR. Is this rule caught by the exception? It has to be necessary or proportionate —the measure here does not seem to be (MS F has done it in a less restrictive way), so it seems to be a barrier to trade here. An absolute ban is too restrictive for the goals. In Doc Morris the court says that Art. 36 can’t be used to have an absolute ban on medicines (more dangerous than alcohol) then alcohol wouldn’t be banned.

The court has been quite relaxed about the cross border requirement —even if there is potential for cross-border trade the EU will allow the claim. So G and BD have a claim.

CS: is it contrary to s.34? Probably falls under Keck selling arrangements. Generally speaking advertising is a selling arrangement, but there are lots of exceptions where it could come generally under Art. 34 (unless Keck is buried). The rule here applies to all traders, but in fact it seems to apply worse to importers, so it’s probably an MEQR. Is it justified. Look at the reasoning in Cassis and Gourmet itself. Could ask whether this is an Art. 35 and CS may want to export his product. Gusbrecht — measures that make foreign sales more difficult than domestic sales (don’t quite know how this would play out, but it seems to raise questions about export here). Can still use Gourmet here (anything that applies to Art. 36 can be used for Art. 35).

SBC: here they want to advertise in E and outside E—have the same issue as above. A country can ban its citizens from advertising overseas. EU law may give a good reason to regulate export advertising —the basic principles of freedom of movement(e.g. mutual recognition). I.e. if you don’t regulate something the other country won’t. If you have a low standard for consumer protection for advertising, then at least on the general level other countries will have to rely on mutual recognition. This in itself is a reason for an MS to have a rule that bans their countries from advertising abroad. Here Gusbrecht, Gourmet and Cassis would mean hat it would not be justified under Art. 35.

Is it justified? Proportionality has two elements: (i) is it appropriate; (ii) is it necessary?

Irish Souvenirs is a good case to bring in here, but it’s the acceptation but not the rule. See C+DB on current position of consumer protection. If this part of the PQ was concerning MEQRs, the consumer is reasonable, they are not stupid. The problem here is not original (if on MEQRs) Dassonville was on Scotch Whisky and label fixing.

General advise — use the tests / recognised frameworks. Look for the tests and use them to work through the questions. Subheadings are a generally good idea.

Question 79

Case C-333/14 Scotch Whisky Association judgment of 23 December 2015.

Answer 79

CJEU: national legislation can impose a minimum price per unit of alcohol for the retail selling of wines, provided that that measure is in fact an appropriate means of securing the objective of the protection of human life and health and that, taking into consideration the objectives of the common agricultural policy and the proper functioning of the common organisation of agricultural markets, it does not go beyond what is necessary to attain that objective of the protection of human life and health.

Question 80

G. Davies, ‘Understanding Market Access: Exploring the Economic Rationality of Different Conceptions of Free Movement Law’ (2010) German Law Journal 671

Answer 80

Thesis: the opposition between “discrimination” and “market access” is largely false, because measures that affect all market actors equally do not, as a matter of economic fact, impede market access. The CJEU appears to recognize this – the types of measures that it found to be outside the scope of the Treaty are those that impose equal burden on all products in the relevant market, and vice versa. 
Equal burden//Selective measures = a distinction that focuses on what matters – one changes the relative competitive positions of market actors whereas the other does not. The Court does not consider equal burden cases to be within the scope of EU law; in contrast, selective measures (whether the selection is on the ground of nationality or not) inevitably push some actors out of the market and are therefore subject to Treaty supervision. 
The CJEU reiterates that it is concerned with measures that disadvantage foreign and cross-border and not those that primarily hurt the domestic. However, IAO this is problematic because:
-	CJEU should be concerned with the position of the individual litigant (and whether their access to market is hindered) not global effect of the rule – a rule that tends to help foreign actors may nevertheless hinder some and these should be able to assert their free movement rights
-	Establishing that the global measure is protectionist may be difficult (requires market research + study of often dynamic sources of goods and services).
But this doesn’t prejudice justification, and the less likely a correlation between nationality and disadvantage, the more likely that the rule pursues a sensible goal. 
Keck broadly (if imperfectly) reflects this stance – the CJEU acknowledges that since selling arrangements usually impose equal burdens there is no need to consider them under the Treaty unless shown to have unequal effect.

Question 81

* I. Lianos, ‘In Memoriam Keck: The Reformation of the EU law on the Free Movement of Goods’ (2015) 40 ELRev 225

Answer 81

Keck has come to an end → recent JP tends again towards an overbroad definition of measures equivalent to quantitative restrictions (MEQR) → shift away from “legal categorization approach” towards balancing of conflicting interests and values.
Choice of appropriate approach depends on aim of economic integration →
- if aim = enhancing economic freedom of suppliers/facilitate inter-Community trade, then any state regulation that might reduce the potential of interstate commerce would in principle fall within scope of MEQR.
- if aim = enhance efficient trade then only restrictions that modify the competitive relationship between imported and domestic goods would be included
Recent cases herald a return to Dassonville-esque doctrine (abandonment of Keck and the “legal categorization approach”), but ≠ Dassonville because focus on the potential impact of the national measure on consumers’ behaviour:
- Commission v Poland and Commission v Lithuania (national rules refusing registration of right-hand drive cars for safety reasons unless the steering equipment was removed to the left-hand side, irrespective of whether the vehicle was new or previously registered in another MS → MS argued safety of drivers → legislation didn’t interfere with freedom to market vehicles, only ability to register them → Commission argued that it dissuaded owners of vehicles from importing them with a view of registering them → Poland argued that the measure was indistinctly applicable since vehicles with steering equipment on the right were also manufactured in Poland):
o per AG Jaaskinen: the measures were indistinctly applicable, but the “presumption of parallelism/equivalence” of Cassis to conclude that Art 34 could apply to indistinctly applicable measures + concluded that the measure in this case fell within its ambit because consumers lose any interest in purchasing vehicles in another MS due to the additional costs of modifying them.
♣ => didn’t characterize the facts into one of the categories (product requirements, selling arrangements, restrictions on use) → he was influenced by the narrow disparate impact on market access approach.
o per CJEU: did not follow the AG but merely cited Dassonville/Cassis/Trailers to conclude that the contested measure constituted a MEQR and then moved straight onto justification → no reference to disparate impact on foreign products vs domestic products + no attention to behaviour of consumers except saying that it was likely to reduce the number of such vehicles in use in that MS
♣ => back to Dassonville/Cassis where the existence of a likely and abstractly defined obstacle to trade = sufficient? → broad view of market access approach.

 CJEU put into question the two main contributions of Keck:
o No factual presumption that selling arrangements don’t constitute an obstacle to trade, shifting burden of proof to C to prove conditions of [17] Keck (measure doesn’t prevent access to market or impede access more than it impedes access of domestic products)
o Departed from interpretation of “market access” → broad conception that looks close to “obstacles to trade” approach in Dassonville/Cassis
Conclusion: Keck caselaw and categorization approach marked the shift towards a more regulatory-friendly approach in interpreting Art 34 TFEU → more ample regulatory policy space for MSs to achieve public interest objectives.
Departure due to (IAO) internal dimension of EU internal market +interaction between EU and national levels + difficulties of implementing the categories in Keck caselaw + external dimension + emergence of new trade/investment regimes. New equilibrium = relies on Art 34 TFEU as a trigger for regulatory cooperation with the aim of regulatory convergence.

Question 82

Case C-2/90 Commission v. Belgium [1992] ECR I-4431 (‘Walloon Waste’);

Answer 82

Facts: Belgian law prohibited the storage or dumping of waste in Wallonia that had originated in another MS or region of Belgium. Argued that it violated Article 34 TFEU. CJEU held that waste was a good and that the measures concerned with hazardous waste were inconsistent with a Directive so were invalid. The measures regarding the non-hazardous wastes were distinctly applicable, so theoretically were only justifiable under Art 36 but because they were non-hazardous they did not present a risk to health so could not be justified under that Article)

AG Jacobs: because it is distinctly applicable, the measure could not be justified on environmental grounds. However, a provision applying throughout a region of a MS, requiring waste to be disposed of within its locality of generation, might be said to be indistinctly applicable – it would work in the same way in preventing the disposal of waste coming from another State or locality.

CJEU: imperative requirements can only be taken into account if the measure applies without distinction, but in assessing whether the barrier is discriminatory, account must be taken of the particular nature of waste. The principle that environmental damage should as a matter of priority be remedied at source (Art 192(2) TFEU) entails that it is for each region to take appropriate steps to ensure that its own waste is collected, treated and disposed of as close as possible to the place where it is produced to limit the transport of waste. Therefore, having regard to the differences between waste produced in different places and the connection of waste to its place of production, the measures cannot be regarded as discriminatory.

Question 83

Case C-67/97 Bluhme [1998] ECR I-8033;

Answer 83

Denmark banned a species of bees from a Danish island so as to protect a group of native bees that live there – uncertain whether these bees were a separate subspecies, and what impact having other bees on the island would have)

CJEU: measures to preserve an indigenous animal polulation with distinct characteristics contribute to biodiversity by ensuring the survival of the population concerned. Thus capable of being justified under Art 36.

It is immaterial whether the object of protection is a subspecies, a distinct strain within a given species, or merely a local colony – as long as the population has characteristics distinguishing them from others and therefore worthy of protection

But the measure has to be proportionate – conservation of biodiversity through establishing areas where a population enjoys special protection is a method already put into practice in EU law and is recognized in the Rio Convention, and because the local bees have recessive genes, keeping out other bees is an appropriate measure in relation to the aim pursued.

Question 84

Case C-28/09 Commission v. Austria (judgment of 21 December 2011).

Answer 84

An alleged breach of Art 34 TFEU by the Austrian government by banning vehicles carrying certain goods on a section of Austrian motorway that was a major European transport route, in order to improve air quality levels and meet EU air quality standards for NO2. Austrian government argued that this was adopted pursuant to the AQFD; Commission argued unlawful restriction of the free movement of goods)
CJEU: the provision clearly obstructs free movement of goods, but this may be justified by overriding requirements relating to the protection of the environment as long as it is proportionate to the aim pursued. In this case, the regulation was adopted to ensure the quality of ambient air and is therefore justified on EProtction grounds, however, because it cannot properly be regarded as a “plan” or “programme” or alternatively because it doesn’t contain all the information listed in the Directive, the regulation cannot be regarded as constituting a correct and full implementation o the Directive. Though this does not preclude the possibility that the obstacle can be justified by one of the imperative requirements in the public interest, but ultimately this was found to be disproportionate because less restrictive means had not been adequately explored, and therefore unlawful.

Question 85

(c) Prohibition of discriminatory taxation: Article 110 TFEU

Answer 85

Article 110 related to national taxation systems operating internally.

Question 86

What is the definition of ‘internal taxation’?

Answer 86

Denkavit v France (Case 132/78) defined internal taxation as ‘a general system of internal duties
applied systematically and in accordance with the same criteria to domestic products and
imported products alike’.

Question 87

What is the definition of ‘internal taxation’?

Answer 87

A charge is a tax if it is part of an internal system of taxation, as indicated by Denkavit. Customs
duties and CEEs are charges levied on goods by reason of importation.

Question 88

How is internal taxation distinguished from customs duties and CEEs?

Answer 88

No, because Article 110 and 30 are complementary yet mutually exclusive (Deutschmann v
Germany (Case 10/65)), so a charge on goods cannot be both a customs duty.CEE,

Question 89

Why is the distinction important?

Answer 89

If classed as a customs duty or CEE, it is unlawful under Article 30 TFEU; if classed as a tax, it is
permissible provided it complies with Article 110 TFEU.

Question 90

Why would a tax be allowed?

Answer 90

The EU does not prohibit national taxation but taxation that discriminates between imported and
domestically produced goods.

Question 91

What is the effect of Article 110?

Answer 91

The EU does not prohibit national taxation but taxation that discriminates between imported and
domestically produced goods.

Question 92

What happens if they are breached?

Answer 92

(a) If Article 110(1) is breached, the MS must equalise the tax;
(b) if Article 110(2) is breached, the MS only has to remove the competitive effect of the tax
regulation.

Question 93

What is the difference between direct and indirect discrimination?

Answer 93

(a) Direct discrimination: when measures openly tax imported and domestic goods at different
rates.
(b) Indirect discrimination: taxation appears not to discriminate between imported and domestically
imported produced goods but nevertheless has the discriminatory effect.

Question 94

What is an example case of direct discrimination?

Answer 94

Lutticke (Alfons) GmbH v Hauptzollmt Saarlouis (Case 57/65):

A German tax on imported, but not domestically produced, powdered milk.

Question 95

What is an example case of indirect discrimination?

Answer 95

Humblot v Directeur des Services Fiscaux (Case 112/84) [1985] ECR:

A French system of annual taxation which subjected lower power-rated cars to a lower tax
than higher power-rated cars. As France did not produce the latter, the effect was to place
imported cards at a competitive disadvantage, amounting to indirect discrimination and a
breach of Article 110.

Question 96

How else can taxation be deemed discriminatory?

Answer 96

There are 2 ways:

(1) The system of collection may be discriminatory;
(2) the basis of tax assessment may be discriminatory.

Question 97

What is an example case where the system of collection was deemed to be discriminatory?

Answer 97

Commission v Ireland (Excise Payments) (Case 55/79) [1980] ECR 481:

Ireland allowed domestic producers of spirits, beer and wine deferment of tax payments
until the products were marketed, whilst importers had to pay on importation. The tax rate
rate was equal but the system of collection was discriminatory and breached Article 110.

Question 98

What is an example case where the assessment of tax was discriminatory?

Answer 98

Outokumpu Oy (Case C-213/96) [1998] ECRI-1777:

Finnish tax on domestically produced energy varied according to the methods of production,
whereas imported electrictiy was taxed at a flat rate that was higher than the lowest rate charged
on the domestic product. The Court of Justic held that there is a breach of Article 110 where a
different method of calculation leads, if only in certain circumstances, to a higher tax on the
imported product.

Question 99

Can taxation ever be justified?

Answer 99

Directly discriminatory taxation can never be justified and always breaches Article 110.

By contrast, indirectly discriminatory taxation may be objectively justified.

Question 100

What does objectively justified mean?

Answer 100

Chemical Farmaceutici SpA v DAF SpA (Case 140/79 [1981] ECR 1:

Italy imposed higher a higher tax on synthetic alcohol than on alcohol produced by fermentation,
even though the products had identical uses. Italy produced very little synthetic alcohol. It argued
that the system was based on ‘legitimate choice of economic policy’ aimed to encourage
production by fermentation rather than from ethylene, which, it maintained, should be reserved for
more important economic uses. Although, on the facts, the Court of Justice found no
discriminatory effect on the imported product, it accepted that legitimate policy objective would
justify differential taxation.

Question 101

What does ‘similar’ product mean?

Answer 101

Article 110(1) prohibits the differential taxation of ‘similar’ products. In a number of cases
concerning alcoholic drinks, the Court of Justice has interpreted ‘similar’ broadly, to mean similar
characteristics and comparable use, for instance in considering the similarity of Scotch whisky
and liqueur fruit wine (John Walker v Ministeriet for Skatter (Case 243/84)) and non-fruit
spirits and fruit spirits (Commission v France (French Taxation of Spirits) (Case 168/78)).

Question 102

What does ‘indirect protection to other products’ mean?

Answer 102

Under Article 110(2), where imported and domestic goods are not similar but simply in
competition with each other, national taxation must not give advantage to the domestic product.

Question 103

What is an an example case?

Answer 103

Commission v UK (Excise Duties on Wine) (Case 170/78) [1980] ECR 417, [1983] ECR 2265:

The UK taxed wine at a higher rate than wine. Comparing beer with the cheaper varieties of wine,
the Court of Justice found that there was a degree of substitution between them and that the two
products were in competition. Since the taxation favoured the domestic product, it breached 
Article 110(2).

Question 104

Gysbrechts,

Answer 104

Groenveld the
Court considered that only discriminatory measures could constitute prohibited restrictions on
exports, this position seems to be qualified by Gysbrechts, in which equally applicable rules were
found to be within Art 35 if they had greater effect on exports

Question 105

Ianelli v Volpi SPA

Answer 105

13):‘The
prohibition of quantitative restrictions and measures having equivalent effect laid down in Article [34]
of the Treaty is mandatory and explicit and its implementation does not require any subsequent
intervention of the Member States or Community institutions. The prohibition therefore has direct
effect and creates individual rights which national courts must protect (…)’.

Question 106

DocMorris

Answer 106

German legislation which prohibited the sale of medicinal products outside of
pharmacies fell within Article 34. 1 The court reasoned that “for pharmacies not established in
Germany, the internet provides a more significant way to gain direct access to the German market.”
Therefore, any prohibition which had greater impact on pharmacies established outside German
territory could “impede access to the market for products from other MSs, more than it impedes
1 The measure could not be justified for non-prescription medicine under Article 36 but could for prescription
medicine access for domestic products”.

This case failed 2nd limb of Keck question:

(1) does the provision apply to all the affected traders operating within the national territory?
(2) does the measure affect in the same manner, in law and in fact, the marketing of domestic
products and of those from other Member States (MSs)?

Question 107

KerOptica

Answer 107

indirect ban on internet sales of contact lenses

Question 108

Commission v Greece

Answer 108

a restriction on the kinds of retails outlets from which certain goods could be sold
was a certain selling arrangement.

Question 109

De Agostini

Answer 109

a ban on TV ads aimed at children under 12 and misleading commercials for skin care
products were certain selling arrangements

but contrast Gourmet where there was an outright ban on advertising

Question 110

Leclerc-Siplec

Answer 110

partial ban of advertising may be permissible whereas complete ban more likely to impede market access

Question 111

Do internet bans really impede market access?

Answer 111

“purchase behaviour on the
Internet tends to be more conservative than in traditional stores”.

Peter J. Danaher, Isaac W. Wilson and Robert A. Davis Source ‘A Comparison of Online and Offline
Consumer Brand Loyalty’, Marketing Science, Vol. 22, No. 4 (Autumn, 2003),

Question 112

What approach to the courts take in in causation test to find MEQR?

Answer 112

the ECJ have demonstrated in Commission v Poland and Commission v
Lithuania that no robust causation test is required for the Court to find an MEQR. Rather, the Court
“conducts an abstract analysis” (I. Lianos, ‘In Memoriam Keck’).

Question 113

Lianos’ market access test

Answer 113

arguably the Court has shifted away from the “categorization approach”

AG Jaaskinen and the ECJ in Commission v
Poland and Commission v Lithuania did not categorise the cases as restriction on use. Rather, the
emphasis was on the assessment on hindrances to market access

this potentially complete the cycle to recast the Dassonville formula.

This would be a welcomed change, consolidating a more
encompassing test that allows harmonious assessment of potential restrictions rather than working
with “rigid distinctions”. 7 Applying this test to the facts, the effect of banning internet sales is to
hinder access to E’s market via online forums because it restricts the volume of sales by limiting
online marketing opportunities.

Question 114

The Court’s approach in advertising cases seems to be based on three steps:

Answer 114

(1) it holds that certain methods of promoting the sale of a product are selling arrangements
(Hünermund and Others);
(2) it proceeds to examine the scope of the advertising restriction (whether outright prohibition or
not);
(3) it proceeds to examine discrimination (whether the national restriction in question affects the
marketing of goods from other Member States differently from that of domestic goods).

the Court has held that an “absolute prohibition of advertising
the characteristics of a product” 9 could impede market access of products from other Member States
more than it impedes access by domestic products, with which the consumers are more familiar (Gourmet international; Douwe Egberts)

Where is not a complete ban i.e. Hunermund and Others and Leclerc-Siplec, the courts have generally held that it falls within keck and therefore outside Article 34

Question 115

Aragonese de Publicidad Exterior and Publicia

Answer 115

rejected the argument that a ban on advertising alcoholic drinks over 23%, whereby the majority of the alcoholic drinks produced in the region were below 23%, was discriminatory.

Need to show ‘arbitrary discrimination’ or ‘disguised restriction on intra-community trade’

Question 116

Justification for alcohol on health grounds

Answer 116

Although health grounds are an accepted basis for banning alcohol (Gourmet International), if a ban only concerns beer and consumers in MS will still be exposed to adverts promoting stronger alcohols, then this would not play in favour of public health considerations.

Question 117

Why might a ban be prohibited under export laws?

Answer 117

if a product is banned from being advertised, but it is mainly exported (plus discriminatory ban) then the exporters will lose an opportunity to penetrate a foreign market/foreign consumers don’t have the opportunity to be steered towards consumption of different products etc. Under Gysbrechts, such a measure would be an MEQR.

Question 118

Can the case law for Art 34 be applied in the same way to Article 35?

Answer 118

it’s still not 100% certain that the
case law under Art 34 can be applied to Art 35 in the same way.

(Of course you were not meant to mention it, but this extract from the opinion of AG Jacobs in Alpine Investment is interesting in this respect (for general knowledge only): ‘It may be doubted however
whether the case-law of the Court under Article 34 applies to rules of the exporting Member State
concerning the marketing of goods. A Member State may prohibit traders established in its territory
from using a marketing technique in order to sell their products in that State. However, it does not
follow that it is entitled to prohibit them from using that marketing technique in order to sell their
products in other Member States. Clearly, a trader cannot be required by the exporting Member State
to abstain from using in another Member State a form of advertising which is prohibited in the
exporting State but is permitted in the other Member State in order to market his products in the latter,
unless there is a good reason for the prohibition.’)

Question 119

Member State A has become concerned about e-cigarettes, because the medium and long-term health effects of their use are unclear. It therefore enacts three laws relating to these products.

The first law regulates the way in which e-cigarettes are produced, specifying a particular procedure for their lawful manufacture, which includes certain safety features. The second law regulates distribution: e-cigarettes cannot be purchased by any person under the age of 18; they cannot be advertised on TV; and they can be sold only at certain designated outlets. The third law deals with financial matters: manufacturers of e-cigarettes are subject to a higher tax rate than manufacturers of cigarettes, and they must contribute to a fund for medical studies concerning the effect of such products. There are some small firms producing e-cigarettes in Member State A, but there is no large producer.

Smoke Safely plc, a large producer of e-cigarettes, is based in Member State B and sells e-cigarettes into Member State A. The production of e-cigarettes is lawful in Member State B, but Smoke Safely plc’s production process does not comply with the law on production of e-cigarettes in Member State A. The marketing strategy of Smoke Safely plc is strongly dependent on advertising in all forms of media outlet.

Advise Member State A and Smoke Safely plc as to the legality of the laws of Member State A under EU law.

1. Particular procedure for their lawful manufacture
   (i) Does it fall withint Art. 34?

Answer 119

1. Does it fall within Article 34?

Article 34 TFEU prohibits all quantitative restrictions on imports and all measures having equivalent effect, subject to justification. Further, we know from Case 74/76 Ianelli v Volpi that this prohibition is ‘mandatory and explicit’ and has direct effect, requiring national courts to protect the individual rights (such as that of Smoke Safely plc). Dassonville establishes a wide definition for an MEQR: ‘all trading rules enacted by a member state which are capable of hindering, directly or indirectly, actually or potentially intra-community trade’. In that case, Belgium’s requirement for a certificate or origin constituted such an MEQR because it was a restriction with the effect (albeit not purpose) of hindering, directly or indirectly trade. Applying this to the facts, the procedure has the potential of hindering trade by imposing additional costs on the manufacturers outside of A. This is analogous to Walter Rau, in which a Belgian measure was held to be an MEQR because it required all margarine to be sold in a cube-shape, thereby increasing the cost for non-Belgian producers who would need to adapt their packaging to comply with the requirement not imposed in their own national legislation.

Further, although only a transitional measure, Directive 70/50 distinguishes between distinctly and indistinctly applicable measures. The present restriction would fall into the latter because it concerns the ‘composition’ (Article 3 Directive 70/50) of the good and applies to the home member state and other countries. This is significant because indistinctly applicable measures may be justified by reference to the mandatory requirements set out in Cassis de Dijon, as well as the derogations established in Article 36 TFEU.

Finally, the mutual recognition principle, established in Cassis de Dijon and now enshrined in the Mutual Recognition Regulation (764/2008/EC), ordinarily establishes a presumption that where goods have been lawfully produced and marketed in MS 1, they can in principle be sold in MS 2 without further restriction. However, it only operates in the absence of harmonisation. If the law in A adheres to Directive 2004/40/EU (the tobacco Directive), then the principle will not apply. If, however, if goes above and beyond the Directive, then it may apply, thereby establishing a presumption that the law breaches Article 34 TFEU.

Question 120

Member State A has become concerned about e-cigarettes, because the medium and long-term health effects of their use are unclear. It therefore enacts three laws relating to these products.

The first law regulates the way in which e-cigarettes are produced, specifying a particular procedure for their lawful manufacture, which includes certain safety features. The second law regulates distribution: e-cigarettes cannot be purchased by any person under the age of 18; they cannot be advertised on TV; and they can be sold only at certain designated outlets. The third law deals with financial matters: manufacturers of e-cigarettes are subject to a higher tax rate than manufacturers of cigarettes, and they must contribute to a fund for medical studies concerning the effect of such products. There are some small firms producing e-cigarettes in Member State A, but there is no large producer.

Smoke Safely plc, a large producer of e-cigarettes, is based in Member State B and sells e-cigarettes into Member State A. The production of e-cigarettes is lawful in Member State B, but Smoke Safely plc’s production process does not comply with the law on production of e-cigarettes in Member State A. The marketing strategy of Smoke Safely plc is strongly dependent on advertising in all forms of media outlet.

Advise Member State A and Smoke Safely plc as to the legality of the laws of Member State A under EU law.

1. Particular procedure for their lawful manufacture
   (ii) Are there any possible justifications?

Answer 120

A has a possible defence in the ‘protection of the health and life of humans, animals or plants’, found in Article 36 TFEU, and the mandatory requirement ground of ‘public health’, espoused in Cassis de Dijon. Two requirements must be met in order to be justified.

(1) the legislation at issue must be suitable to protect human health;
(2) it must be proportionate to the objective.

First, the specific law seeks to regulate the production of a product which raises potential health concerns and establishes certain safety features. The ECJ requires objective evidence in order to uphold this defence. In Commission v Germany ‘Beer Purity’, the German government banned the marketing of beer containing all additives on the ground that the long-term effect of additives was not known. The ECJ examined the scientific evidence and found little evidence that additives presented a risk to public health. If the scientific evidence is inconclusive, the ECJ will allow MSs to decide if the degree of health protection is required. In Santoz, the ECJ accepted the death of scientific evidence about vitamins which meant that the Dutch restriction on Muesli bars was permitted (the precautionary principle). In the present case, A would be required to produce some evidence that there is a correlation between the use of e-cigarettes and smoking. The fact that the evidence is inconclusive may be sufficient to justify the precautionary restriction, as it was in Santoz.

The second requirement is that it must be proportionate, and it will most likely be satisfied. It requires that the measure does not extend further than is necessary. In Walter Rau, labelling would have protected customers in a less restrictive way than requiring shaped packaging and was regarded as disproportionate. In the present case, there is no evidence that the procedure goes beyond what is necessary and the health and safety feature is suitable. Finally, the question of proportionality is normally left to the national courts to decide. Gourmet International held that whether it is proportionate ‘calls for an analysis of the circumstances of law and of fact which characterises the situation in the Member State concerned.’ However, this has been made more uncertain following Commission v Lithuania, in which the ECJ held that ‘there exist means and measures less restrictive’, concluding that ‘the measure at issue is not compatible with the principle of proportionality’. No principled distinction can be drawn do determine when the courts will decide for themselves whether the measure is proportionate. Regardless of who makes the decision, on balance, it is likely to be regarded as proportionate as there is no evidence that less restrictive measures could be used.

Question 121

Member State A has become concerned about e-cigarettes, because the medium and long-term health effects of their use are unclear. It therefore enacts three laws relating to these products.

The first law regulates the way in which e-cigarettes are produced, specifying a particular procedure for their lawful manufacture, which includes certain safety features. The second law regulates distribution: e-cigarettes cannot be purchased by any person under the age of 18; they cannot be advertised on TV; and they can be sold only at certain designated outlets. The third law deals with financial matters: manufacturers of e-cigarettes are subject to a higher tax rate than manufacturers of cigarettes, and they must contribute to a fund for medical studies concerning the effect of such products. There are some small firms producing e-cigarettes in Member State A, but there is no large producer.

Smoke Safely plc, a large producer of e-cigarettes, is based in Member State B and sells e-cigarettes into Member State A. The production of e-cigarettes is lawful in Member State B, but Smoke Safely plc’s production process does not comply with the law on production of e-cigarettes in Member State A. The marketing strategy of Smoke Safely plc is strongly dependent on advertising in all forms of media outlet.

Advise Member State A and Smoke Safely plc as to the legality of the laws of Member State A under EU law.

2. Regulated distribution
   (a) Prohibition on purchases made by under 18s
   (i) Does it fall within Art. 34?

Answer 121

The prohibition on sale of under-18s would be a certain selling arrangement under Keck v Mithouard because it applies to how the goods are sold (i.e. who can buy it) rather than rules relating to the goods themselves, such as packaging, content, and labelling, though this distinction may prove difficult to make in practice. Once the provision falls within Keck, the next questions are:

1. Does the provision apply to all the affected traders operating within the national territory?
2. Does the measure affect in the same manner, in law and in fact, the marketing of domestic products and those form other MSs?

The prohibition on all under-18-year olds clearly satisfies the first requirement. Further, it is likely to satisfy the second requirement too as there is no evidence to suggest that domestic goods will benefit either in law or fact from this restriction. As the restriction is a certain selling arrangement, is falls outside of Article 34 and does not need to be justified. Consequently, the law will be upheld.

Alternatively, it could be classified as a prohibition on use, thereby falling within Article 34. Commission v Italy and Aklagaren v Mickelsson Roos provide guidance in such cases. In the latter case, the ECJ held that a restriction on the use of jet-skis on certain waterways result in consumers have a very limited interest in buying that product. The effect of the restriction was to hinder the access to the domestic market in question for those goods and constituted a breach of Article 34 TFEU but was justified by the need to protect the environment. In the present case, it is likely that the justification of protection of health, as reasoned in part 1(ii), would apply. Therefore, the law would be upheld either way.

Question 122

Member State A has become concerned about e-cigarettes, because the medium and long-term health effects of their use are unclear. It therefore enacts three laws relating to these products.

The first law regulates the way in which e-cigarettes are produced, specifying a particular procedure for their lawful manufacture, which includes certain safety features. The second law regulates distribution: e-cigarettes cannot be purchased by any person under the age of 18; they cannot be advertised on TV; and they can be sold only at certain designated outlets. The third law deals with financial matters: manufacturers of e-cigarettes are subject to a higher tax rate than manufacturers of cigarettes, and they must contribute to a fund for medical studies concerning the effect of such products. There are some small firms producing e-cigarettes in Member State A, but there is no large producer.

Smoke Safely plc, a large producer of e-cigarettes, is based in Member State B and sells e-cigarettes into Member State A. The production of e-cigarettes is lawful in Member State B, but Smoke Safely plc’s production process does not comply with the law on production of e-cigarettes in Member State A. The marketing strategy of Smoke Safely plc is strongly dependent on advertising in all forms of media outlet.

Advise Member State A and Smoke Safely plc as to the legality of the laws of Member State A under EU law.

2. Regulated distribution
   (b) Ban on TV advertising
   (i) Does it fall within Art. 34?

Answer 122

Once again, the present provision would constitute a certain selling arrangement under Keck v Mithouard. This case is analogous to De Agostini, which held that a ban on TV ads aimed at children under 12 and misleading commercials for skin care products were certain selling arrangements. In the present case, a ban on TV advertising e-cigarettes concerns how the goods are marketed rather than the goods themselves. Therefore, it must satisfy the two requirements laid out above.

The provision clearly satisfies the first question as there is no evidence that the restriction is limited to imported products. However, the measure may fail the second question. We are told that the ‘marketing strategy of Smoke Safely plc is strongly dependent on advertising in all forms of media outlet.’ Further, in Gourmet International, the ECJ noted that the choice of alcoholic drink is linked to social practices and habits. AG Jacobs opined that ‘such ingrained consumer habits will tend to favour national beverages.’ The contentious point is whether smoking is culturally analogous to drinking. In some cultures, such as Muslim countries where alcohol is prohibited and flavoured tobacco is commonplace, the analogy is stronger than in other countries where smoking is culturally stigmatised whilst drinking is accepted. Further, an outright ban (Gourmet International) is more likely to ground a finding of unequal treatment in fact than partial, tailored bans (Leclerc-Siplec). On balance, the ban would fail the second requirement meaning it falls within Article 34, subject to justification.

Question 123

Member State A has become concerned about e-cigarettes, because the medium and long-term health effects of their use are unclear. It therefore enacts three laws relating to these products.

The first law regulates the way in which e-cigarettes are produced, specifying a particular procedure for their lawful manufacture, which includes certain safety features. The second law regulates distribution: e-cigarettes cannot be purchased by any person under the age of 18; they cannot be advertised on TV; and they can be sold only at certain designated outlets. The third law deals with financial matters: manufacturers of e-cigarettes are subject to a higher tax rate than manufacturers of cigarettes, and they must contribute to a fund for medical studies concerning the effect of such products. There are some small firms producing e-cigarettes in Member State A, but there is no large producer.

Smoke Safely plc, a large producer of e-cigarettes, is based in Member State B and sells e-cigarettes into Member State A. The production of e-cigarettes is lawful in Member State B, but Smoke Safely plc’s production process does not comply with the law on production of e-cigarettes in Member State A. The marketing strategy of Smoke Safely plc is strongly dependent on advertising in all forms of media outlet.

Advise Member State A and Smoke Safely plc as to the legality of the laws of Member State A under EU law.

2. Regulated distribution
   (b) Ban on TV advertising
   (ii) Are there any possible justifications?

Answer 123

The ECJ held in De Agostini that it is for the national courts to determine whether a ban is necessary to satisfy overriding requirements of general public importance or one of the aims listed in Article 36 TFEU, and whether it is proportionate.

The provision would be justified under ‘public health’ for the reasons laid out in (1)(ii). Any attempts to rebut this claim on proportionality grounds would be unlikely to succeed since the Directive 2014/40/EU held that restrictions on tobacco advertising (including advertising e-cigarettes) were in fact proportionate since it does not arbitrarily or manifestly exceed the limits of what is appropriate and necessary to achieve the objectives pursued by the directive. An example of where an arbitrary law was not permitted under the second paragraph of Article 36 is Commission v UK ‘Imports on Poultry Meat’. In that case, there were no genuine health concerns and can be distinguished from the present case.

Question 124

Member State A has become concerned about e-cigarettes, because the medium and long-term health effects of their use are unclear. It therefore enacts three laws relating to these products.

The first law regulates the way in which e-cigarettes are produced, specifying a particular procedure for their lawful manufacture, which includes certain safety features. The second law regulates distribution: e-cigarettes cannot be purchased by any person under the age of 18; they cannot be advertised on TV; and they can be sold only at certain designated outlets. The third law deals with financial matters: manufacturers of e-cigarettes are subject to a higher tax rate than manufacturers of cigarettes, and they must contribute to a fund for medical studies concerning the effect of such products. There are some small firms producing e-cigarettes in Member State A, but there is no large producer.

Smoke Safely plc, a large producer of e-cigarettes, is based in Member State B and sells e-cigarettes into Member State A. The production of e-cigarettes is lawful in Member State B, but Smoke Safely plc’s production process does not comply with the law on production of e-cigarettes in Member State A. The marketing strategy of Smoke Safely plc is strongly dependent on advertising in all forms of media outlet.

Advise Member State A and Smoke Safely plc as to the legality of the laws of Member State A under EU law.

2. Regulated distribution
   (c) Restriction on where the goods can be bought
   (i) does it fall within Art. 34?

Answer 124

Once again, the present provision would constitute a certain selling arrangement under Keck v Mithouard. The present scenario is analogous with Commission v Greece, in which the ECJ held that a restriction on the kinds of retail outlets from which certain goods could be sold was a certain selling arrangement. Crucially, it was held to be a certain selling arrangement because it related to restrictions on physical location

of selling place (pharmacy-shop), and can be distinguished from selling by internet, which provides a ‘more significant way’ to market access for sellers established in other MSs (DocMorris). The present scenario relates to restriction on physical locations, like in Commission v Greece, and can therefore be distinguished from DocMorris.

The provision clearly satisfies the first question as there is no evidence that the restriction is limited to imported products. It is also likely to satisfy the second requirement because restriction on the physical locations where a good could be sold was held to affect all producers in the same manner in Commission v Greece.

Question 125

Member State A has become concerned about e-cigarettes, because the medium and long-term health effects of their use are unclear. It therefore enacts three laws relating to these products.

The first law regulates the way in which e-cigarettes are produced, specifying a particular procedure for their lawful manufacture, which includes certain safety features. The second law regulates distribution: e-cigarettes cannot be purchased by any person under the age of 18; they cannot be advertised on TV; and they can be sold only at certain designated outlets. The third law deals with financial matters: manufacturers of e-cigarettes are subject to a higher tax rate than manufacturers of cigarettes, and they must contribute to a fund for medical studies concerning the effect of such products. There are some small firms producing e-cigarettes in Member State A, but there is no large producer.

Smoke Safely plc, a large producer of e-cigarettes, is based in Member State B and sells e-cigarettes into Member State A. The production of e-cigarettes is lawful in Member State B, but Smoke Safely plc’s production process does not comply with the law on production of e-cigarettes in Member State A. The marketing strategy of Smoke Safely plc is strongly dependent on advertising in all forms of media outlet.

Advise Member State A and Smoke Safely plc as to the legality of the laws of Member State A under EU law.

3. Financial matters
   (a) Higher tax
   (i) does it fall within Art. 110?

Answer 125

The higher tax rate on e-cigarettes than manufacturers of cigarettes would fall within Article 110 TFEU, which concerns national taxation systems operating internally. Article 110(1) prohibits taxes on imported products exceeding those applied to similar domestic products, whilst Article 110(2) prohibits taxes on imported products giving an indirect protection to other products. In addition, the ECJ defined ‘similar’ products in a number of cases concerning alcoholic drinks to mean similar characteristics and comparable use, for instance Scotch whisky and liqueur fruit wine (John Walker v Ministeriet for Skatter) and non-fruit spirits and fruit spirits (Commission v France (French Taxation of Spirits)). In the present scenario, tax breaches Article 110(1) because e-cigarettes share similar characteristics and comparable use (i.e. both smoked, contain nicotine). Further, direct discriminatory taxes cannot be justified. In Lutticke (Alfons) GmbH, a German tax on imported, but not domestically produced milk, was prohibited. On the other hand, indirect discriminatory tax appears not to discriminate between imported and domestically produced products but nevertheless has a discriminatory effect, may be objectively justified. For example, Humblot v Directeur des Services Fiscaux in which a French system of annual taxation subjected lower power-rated cars to a lower tax than higher power-rated cars. As France did not produce the latter, the effect was to place imported cars at a competitive disadvantage, amounting to indirect discrimination and a breach of article 110. In the present scenario, there is indirect discrimination as there are some small firms producing e-cigarettes in Member State A, but there is no large producer.

NB RODERIC: With regard to higher tax on e-cigarettes than normal cigarettes: your argument that they are similar products may hold, but you have not explained why it may constitute an indirect discrimination on products manufactured in B. Alternatively, the discussion could probably revolve around 110 (2). Case 170/78 Commission v United Kingdom could be mentioned: ‘the UK levied an excise tax on certain wines which was roughly five times the tax levied on beer. The UK produces considerable amounts of beer, but very little wine. After establishing that light wines were genuinely in competition with beer, the Court of Justice found that by levying excise duty on light wines from fresh grapes at a higher rate, in relative terms, than on beer, the UK had failed to fulfil its obligations under the second paragraph of Article 110 TFEU.’ (as quoted from the EU guide on the application of provisions on free movement of goods – please find it attached. It may prove useful for your revisions if you have decided to pick free movements as part of your exam strategy).

Question 126

Member State A has become concerned about e-cigarettes, because the medium and long-term health effects of their use are unclear. It therefore enacts three laws relating to these products.

The first law regulates the way in which e-cigarettes are produced, specifying a particular procedure for their lawful manufacture, which includes certain safety features. The second law regulates distribution: e-cigarettes cannot be purchased by any person under the age of 18; they cannot be advertised on TV; and they can be sold only at certain designated outlets. The third law deals with financial matters: manufacturers of e-cigarettes are subject to a higher tax rate than manufacturers of cigarettes, and they must contribute to a fund for medical studies concerning the effect of such products. There are some small firms producing e-cigarettes in Member State A, but there is no large producer.

Smoke Safely plc, a large producer of e-cigarettes, is based in Member State B and sells e-cigarettes into Member State A. The production of e-cigarettes is lawful in Member State B, but Smoke Safely plc’s production process does not comply with the law on production of e-cigarettes in Member State A. The marketing strategy of Smoke Safely plc is strongly dependent on advertising in all forms of media outlet.

Advise Member State A and Smoke Safely plc as to the legality of the laws of Member State A under EU law.

3. Financial matters
   (a) Higher tax
   (ii) Can it be justified?

Answer 126

Indirectly discriminatory taxation may be justified as seen in the case of Chemial Farmaceutici. However, it must be proved that the national interest relied on must be unconnected with the origin of the product (i.e. it must be something neutral); the national interest must pursue an objective recognised by the EU as legitimate (i.e. environmental protection, regional development, public morality); the steps taken to protect that interest must be proportionate. In the present case, the tax is most likely for the purposes of disincentivising e-cigarettes which encourage smoking-related behaviour among young people. It is therefore neutral. It is for the protection of health which the EU has repeatedly regarded as a legitimate aim (see Gourmet International where ECJ reiterates the importance of public health as a legitimate concern, though it concerned the effects of alcohol). However, the fact that normal cigarettes are not taxed at the same rate may provide sufficient ground to argue that it is disproportionate.

Overall, it is likely that Article 110(1) will be breached and the MS must equalise the tax.

Question 127

Member State A has become concerned about e-cigarettes, because the medium and long-term health effects of their use are unclear. It therefore enacts three laws relating to these products.

The first law regulates the way in which e-cigarettes are produced, specifying a particular procedure for their lawful manufacture, which includes certain safety features. The second law regulates distribution: e-cigarettes cannot be purchased by any person under the age of 18; they cannot be advertised on TV; and they can be sold only at certain designated outlets. The third law deals with financial matters: manufacturers of e-cigarettes are subject to a higher tax rate than manufacturers of cigarettes, and they must contribute to a fund for medical studies concerning the effect of such products. There are some small firms producing e-cigarettes in Member State A, but there is no large producer.

Smoke Safely plc, a large producer of e-cigarettes, is based in Member State B and sells e-cigarettes into Member State A. The production of e-cigarettes is lawful in Member State B, but Smoke Safely plc’s production process does not comply with the law on production of e-cigarettes in Member State A. The marketing strategy of Smoke Safely plc is strongly dependent on advertising in all forms of media outlet.

Advise Member State A and Smoke Safely plc as to the legality of the laws of Member State A under EU law.

3. Financial matters
   (b) Compulsory contribution to a health fund
   (i) does it fall within Art. 110?
   (ii) can it justified?

Answer 127

This also concerns an internal tax and falls within Article 110(1). E-cigarette manufacturers are required to pay into a health fund whilst normal cigarettes are not and we know A does not have many e-cigarette manufacturers thus is also a case if indirect discrimination.

Can it be justified?

The key difference is that the effects of cigarettes are known, whereas the effects of e-cigarettes remain unknown. Therefore, the compulsory contribution is likely to be held as proportionate.