⇒ The EU is all about creating a ‘single market’/internal market

• Article 1 TEU: “creating an ever closer union”
• Art 3, par 1 TEU= “promote peace, values and the well-being of its peoples”
• Art 3, par 3 TEU = “The Union shall establish an internal market”
• Art 3 TFEU = “1. The Union shall have exclusive competence in the following areas: […] (b) the establishing of the competitions rules necessary for the functioning of the internal market

⇒ Hallstein: “With Europe the drive towards unification was largely political”

⇒ What once had been mere diplomacy (art or practice of conducting international relations) was then replaced by ‘the European idea” – a process of integration premised upon market-integration and the rule of law

• Hallstein agrees with this and talks of ‘dynamism’, meaning integration is a continuing process + must continue, otherwise it disintegrates

⇒ a) Preliminary Reference Procedure – Article 267

⇒ b) Effects of EU law on National Law: the Two Doctrines of “Supremacy” and of “Direct Effect” - the provision on free movement of goods has primacy over national law and has direct effect insofar as individuals can invoke it before national courts

⇒ Article 34 TFEU (ex Art 28 EC):

• “Quantitative restrictions on imports (i.e. tariffs) and all measures having equivalent effect (i.e. any other trade barrier) shall be prohibited between Member States”

⇒ Article 36 TFEU (ex Art 30 EC)

⇒ First, considers whether a challenged, domestic, measure constitutes a trade barrier (“measure having an equivalent effect”) and then, provided that the threshold is crossed and a barrier to inter-State trade shown to exist

⇒ The court subsequently, proceed to examine the force of the public-interest justification (for the trade barrier) advanced by the, national, regulator

⇒ So, in every case regarding a fundamental freedom, we need to ask:

• 1) Is there a trade barrier? (Art 34)
• 2) Is it [i.e. the trade barrier] justified? (Art 36)

The answer to this is the Dassonville formula: Dassonville case [1974]

⇒ Trader had consignment of Whiskey which was in free circulation in France and wanted to import into Belgium

⇒ But Belgium required a Certificate of Origin (from the British Customs Authorities), which the trader did not have, thus infringing Belgian rules

⇒ The trader argued the Certificate of Origin was a barrier to free trade

• It emerged that obtaining the certificate is very hard

⇒ Dassonville formula:

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

⇒ The court went on:

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

⇒ The Dassonville formula expands dramatically the number and type of cases in which a Member State is required to justify its social choices in regulating the market place and its public spheres. The Court, at the same time, had to construct derogations (public interest justifications) narrowly, creating a presumption that just any obstacle to free trade is “improper” and needs to be “justified”

⇒ Institutionally, Dassonville thrust the Court into the centre of substantive policy-dilemmas: the ECJ becomes the arbiter of delicate social choices, reconciling trade with competing social policy issues

⇒ Cassis is a blackcurrant liquor

⇒ Cassis could not be imported into Germany, from France, because its alcoholic content was too low

⇒ German law prohibited marketing liquor with alcohol content of under 25% (Cassis had strength of 15-20%): so Cassis couldn't be imported

• There was regulatory diversity (regulation allowed Cassis to be marketed in France, but not in Germany)

⇒ So, there is an obstacle to trade → thus, Germany must try and justify that obstacle as being in public interest → raised 2 grounds to justify:

• First, the proliferation of alcoholic drinks with a low alcoholic strength on the German market would have the effect of inducing a tolerance among consumers towards alcoholic drinks in general, and more so than stronger alcoholic beverages would
• About consumer protection
• Secondly, alcohol being a cost-factor, drinks with lower alcoholic strength would have an unfair competitive advantage over stronger, more costly, German drinks

⇒ ECJ unconvinced by these justifications

⇒ Bear in mind the 2-part structure of judicial scrutiny:

• 1) Does a domestic measure by a MS constitute a trade barrier?
• 2) Is there a valid public interest justification which the Member State can plead in support of that domestic measure which constitutes a trade barrier? (A36 + mandatory requirements)

⇒ So is there a trade barrier? (Dassonville: measure having equivalent effect)

• YES → pretty uncomplicated decision

⇒ Can Germany rely on a valid public interest justification for its ban?

• Falls down on mandatory requirements → the Art 36 grounds raised above failed so had to go to the second box, mandatory requirements

⇒ The Court began by insisting on the primacy of host state control in the absence of common EU Community rules

• E.g. if you are a British trader wishing to export wine to France, then you would have to comply with French law under host state rule → this implies/entails regulatory diversity
• But, host state rule is not a good concept if you are genuinely interested in the common market (as common market doesn't have reg diversity)
• But, nonetheless, the court in its initial statement emphasises the primacy of host-state control in the absence of EU-wide rules on the marketing of alcoholic beverages

⇒ But, the court immediately qualifies this endorsement of host state rule by saying that they will only apply host state rule (i.e. Germany’s domestic regulatory rule) if they have a valid public interest justification

• The Court called these newly and judicially created public interest justifications, which are independent of and transcend the list in Article 36 TFEU (ex Article 30 EC) – “mandatory requirements”
• If you do not have a valid public interest justification then we revert back to home state rule
• Home state rule is just the opposite: it means that if a product is lawfully marketed, for example, in the UK, then by implication it should be free to circulate anywhere in the EU regardless of what national laws have to say
• So what is being witnessed here is the emergence of a judicially created open list of further public interest justifications, which are totally independent of Art 36, and which transcend the relatively narrow domain of Art 36
• But the burden of proof is on the regulating host state (such as Germany, in Cassis) to make the case in support of its rules

⇒ The Court – and this is the second reason for why Cassis is so important and still being discussed today – introduced a key notion for the internal market: the goods which have been lawfully marketed and produced in member state ‘A’ can in Principe be sold in another member state ‘B’ without further restriction or control, unless member state B (here Germany) can successfully invoke a public interest justification in support of its rules. This key notion is often, among lawyers and political scientists, referred to as the principle of mutual recognition

⇒ The result of mutual recognition is to replace dual regulation of a product – by home state and the importing host state – with a single regulation, by the home state: regulation which, under the principle of mutual recognition, the importing State (here: Germany) is required to respect

⇒ So, again, the Cassis mandatory requirements test states that where there is no common rule at Community level relating to the marketing of the products in question, goods imported in a MS (A) could in general be imported lawfully into any other MS (B) (principle of mutual recognition). However, obstacles to such trade by MS B can be justified so long as such regulatory rules are:

• First, applicable to both their own products and the imported products; they must not single out or discriminate against foreign products, but they must cover any product regardless
• Second, must satisfy the mandatory requirements e.g. those relating to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transaction and the protection of the consumer
• Third, the rules, if satisfied the above 2, must be proportionate to the aim in view i.e. a measure that least restricts free movement of goods

⇒ “Indistinctly applicable” or indirectly discriminatory measures should normally be considered under Cassis de Dijon;

• I.e. it is the effects of such an indistinctly applicable measure that discriminates e.g. product standards
• So, these are quite easy to justify

⇒ Distinctly applicable, or directly discriminatory measures, should normally be considered under the principle of Art 36 TFEU

• I.e. in circumstances where there is direct discrimination against a certain product from a certain country
• Art 36 measures are only very exceptionally justified – Art 36 is a very narrow list of economic interests which are only justifiable in exceptional circumstances, whereas mandatory requirements are a much broader list which allows MSs to justify things which are not economic interests

⇒ If mandatory requirements were not introduced MSs would feel less willing to comply with the rules of the CJEU – it allows them to plead non-economic policies which weren’t mentioned in Art 30 (now Art 36). Fairness of commercial transactions, public health, cultural policy, etc. and other justification could now be proffered

⇒ There was an issue of market fragmentation

• Before Cassis, if a trader wished to import to MS A, they would have to comply with the regulatory standard of that MS
• Following Cassis, the principle of mutual recognition was introduced, meaning goods complying with the standards required in one member state could be marketed freely in another Member State (Home-state rule v host-state rule)
• Issue = home state rule could lead to deregulation (so MS A can compete with the cheaper goods from MS B, which has a lower regulatory standard, MS A deregulates) = race to the bottom!
• Undermines welfare state imperative to EU MSs

⇒ Question = whether B+Q by keeping shops open on Sunday was contrary to shops act 1950 by keeping shops open on Sunday, except for shops listed by exception like petrol stations

• You may try domestic remedies as a British citizen, but as a lawyer you would look to EU law = strategic litigation
• Could argue that prohibiting trade on a Sunday are a barrier to free trade, and are a measure having an equivalent effect under Art 34

⇒ Held: not a trade barrier → it is a totally domestic affair

⇒ “National rules restricting the opening of shops on Sundays reflected certain choice relating to particular national or regional socio-cultural characteristics. It was for the Member State to make those choice in compliance with the requirements of Community law, in articular the principle of proportionality”

⇒ Selling arrangements and product rules are opposing concepts

⇒ If a domestic measure is only a selling arrangement then it does not anymore fall under Dassonville

⇒ Keck is concerned with first part of 2 stage test: is there a barrier to free trade?

⇒ Keck (“selling arrangements”) limits the catch of Art 34 TFEU → i.e. if a domestic measure can be qualified as selling arrangements, they don’t have to be justified

⇒ Here is the Keck formula:

• “By contrast, contrary to what has previously been decided, the application to products from other MSs of national provisions restricting or prohibiting certain selling arrangements is not such as to hinder directly or indirectly, actually or potentially, trade between MSs 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 MSs” (para 16)
• What is clear hear is the contrast between, on the one hand, product rules (e.g. saying light bulbs must have certain qualities is a product rule) and, on the other hand, rules concerning the marketing of domestic products (e.g. rules concerning pricing of products and advertising for the products and which kind of shops they can be sold in) → These marketing rules are selling arrangements!
• The idea is that product rules are far more intrusive into the common market than only selling arrangements
• Selling arrangements (marketing rules) must not discriminate between traders on the basis of nationality (“apply to all relevant traders…”)

⇒ Keck has often been criticised as being too formalistic and unsatisfactory – given the unspecified (and unspecifiable) nature of the term “selling arrangements”

⇒ Peter Oliver: “Product regulation tends to hinder or impede access to the market, whereas selling arrangements typically leave such access unimpeded”

Gourmet [2001]:

⇒ Sweden legislated to make advertising alcoholic beverages prohibited for welfare/health reasons

⇒ Foreign traders were concerned this law had a discriminatory effect on them as it prevented them the opportunity to introduce Swedish consumers to their products → so they argue the law is inconsistent with requirements under A34

⇒ So 1st question of our 2 stages is: is this Swedish law a measure having an equivalent effect? – And to that effect we must use the Dassonville formula and read that formula in the light of Keck (namely, the market access test)

• The court said if laws, prohibiting selling arrangements, are to be caught by A30 (now Art 36), “they must not be of such a kind as to prevent access to the market by products from another MS or to impede access any more than they impede the access of domestic products” = market access test from Keck (Gourmet, para 18)
• “A prohibition of all advertising directed at consumers in the form of advertisements… highway is liable to impede access to the market by products from other MSs more than it impedes access by domestic products, with which consumers are instantly more familiar.” (Gourmet, para 21)
• So court concludes that this domestic law banning all alcohol advertising is not only a selling arrangement, but is a measure having an equivalent effect
• It is not only a selling arrangement for the precise reason that this law makes it more difficult for foreign products to find access to the market, then it does for domestic products which are deeply connected to a web of local habits, traditions, and customs
• So for that reason, the market access test becomes an instrument, which allows the court to investigate whether or not, in practice, a domestic measure renders market access more difficult or less difficult

⇒ So the three pivotal cases are Dassonville, Cassis and Keck through which the court has structured its case law on free movement of goods

• Whereas Dassonville was obsessed with creating the market by removing obstacles to the free market by construing the Dassonville formula very broadly, with narrow exceptions by way of justifications
• Cassis brought a shift in the sense it expanded the justifications which can be pleaded by a MS in support of its measures through the judge made ‘mandatory requirements’ (i.e. ‘imperative requirements’)
• Keck is a step towards narrowing down the court’s ambit in the sense that at the first step of the 2 step procedure the Dassonville formula is being narrowed down into a more contextual mechanism to assess whether or not there is an obstacle to market access

⇒ As we shall see, there is the introduction of ‘restriction of use’, which appears to run counter to the Keck case in the sense that it expands the Dassonville formula (the Trailer case and the Jet Ski case)

⇒ In the Trailer case [2009] the CJEU dealt with Italian rules forbidding the uses of trailers attached to motorbikes on public roads

⇒ Jet Ski case [2009] dealt with Swedish rules forbidding the use of jet skis on particular designated waterways in Sweden

⇒ In both situations (trailer case and jet ski case), neither rule made life especially difficult for imported goods compared with local products

⇒ But it could not be used in the circumstances outlawed by the national measure

• Does not being able to use the product as you wanted = a measure having an equivalent effect?
• Question: is the use restriction an obstacle to free trade?

⇒ Paragraphs 33-37 of the Trailer case are about the first stage: “is there a national measure which falls under the catch of A34 TFEU?”

⇒ At the second stage now, we have to ask: is there a public interest justification for the trailer law?

• If there is a “distinctly applicable measure” then: the narrow Article 36 TFEU applies
• If there is an “indistinctly applicable measure” then: the “mandatory requirements” under Cassis applies

⇒ Consider now what the Grand Chamber in the Trailer Case had to say on the issue of “public-interest justification” (Articles 58-69):

• Para 58 = so the court says the Italian law will be a measure having an equivalent effect, “unless it can be justified objectively”
• Para 59 = the justification they are trying to invoke is “to ensure road safety, which according to the case-law (i.e. mandatory requirements), constitutes an overriding reason relating to the public interest capable of justifying a hindrance to the free movement of goods”
• Para 64 = proportionality test
• Para 65 = explains proportionality test in more detail.
• “Since the degree of protection may vary from one MS to the other, MSs must be allowed a margin of appreciation and, consequently, the fact that one MS imposes less strict rules than another MS does not mean that the latter’s rules are disproportionate”
• Para 66: it is again the MSs which invoke mandatory requirements and have burden of proof

Developing the theme already present in the Trailer case – that of “restrictions of use” the Court ruled in the Swedish Jetski case as follows:

⇒ “The main proceedings concern the criminal liability of two defendants who are accused of having infringed the Swedish jet-ski regulations. Under those regulations, the use of personal watercraft other than on general navigable waterways and on waters on which the county administrative board has permitted the use of personal watercraft is prohibited and punishable by fine” [2]

⇒ Para 24 = defines measures having an equivalent effect and highlights that “any other measure which hinders access of products originating in other MSs to the market of a MS is also covered by that concept”

• This is a reference to the market access test

⇒ Para 26 = “Even if the national regulations at issue do not have the aim or effect of treating goods coming from other MSs 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 MS 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 MS (see to that effect, Commission v Italy, para 56)”

• This means if you live in a country where you can only marginally use these jetskis that clearly affects your behaviour as a consumer, as you feel less inclined to buy the jetskis
• So the market for the jet skis will collapse in the country
• And according to the court that may cause an obstacle to free trade

⇒ Para 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)”

⇒ Para 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 Article 30 EC or there are overriding public interest requirements, measures having equivalent effect to quantitative restrictions on imports prohibited by Article 28 EC.”