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Notes: In this case, the ECJ viewed that French law fell within the scope of Article 30(now 28) but it was justified. However, the ECJ did not give the reason whether the justification was under Article 30(formerly 36) or the mandatory requirements arising from the Cassis de Dijon(see below).
In Torfaen Borough Council v. B&Q PLC case , the facts were that UK trading law prohibited retail sales on Sunday. B&Q was prosecuted for violation of this law. It claimed that these laws violated Article 30(now 28). The ECJ cited Cinetheque SA v. Federation Nationale des Cinemas Francais case and held that Article 30(now 28) of the Treaty 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.
Notes: In this case, the ECJ also viewed that UK laws fell within the scope of Article 30(now 28) but it was justified. However, as in the Cinetheque case, the judgment was also vague in that the ECJ did not give the reason of justification. If this case had come after Keck and Mithouard case, the reason of the outcome would have been different.(see Semeraro Casa Uno Srl v. Sindaco del Commune di Erbusco case below)
In Keck and Mithouard case, the facts were that Keck & Mithouard sold French beer and coffee at retail prices lower than their own purchase price. They were prosecuted in the French courts for selling goods at a price lower than their actual purchase price(resale at a loss) which was violated French law. Keck and Mithouard claimed that the French law was contrary to Article 30(now 28). The ECJ held that:
By virtue of Article 30, quantitative restrictions and all measures having equivalent effect are prohibited between Member States. The Court has consistently held that any measure which is capable of directly or indirectly, actually or potentially, hindering intra-Community trade constitutes a measure having equivalent effect to a quantitative restriction.
In view of the increasing tendency of traders to invoke Article 30(now 28) 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.
However, contrary to what has previously been decided, the application to products from other Member States of national provisions restricting 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, provided that those provisions apply to all affected traders operating within the national territory and provided that they affect in the same manner, in law and in fact the marketing of domestic products and of those from other Member States.
Accordingly, the reply to be given to the national court is that Article 30 of the EEC Treaty is to be interpreted as not applying to legislation of a Member State imposing a general prohibition on resale at a loss.
In Semeraro Casa Uno Srl v. Sindaco del Commune di Erbusco case , the facts were that Italian law prohibited all shops opened on Sundays, except in special circumstances. One shopping center challenged that Italian law violated Article 30(now 28). The ECJ held that the Italian law concerned selling arrangements and was therefore outside the scope of this Article.
From Procureur du Roi v. Dassonville case to Keck and Mithouard case and Semeraro Casa Uno Srl v. Sindaco del Commune di Erbusco case, it is clear that in the past(Procureur du Roi v. Dassonville case) the ECJ defined the meaning of measure having an effect equivalent to a quantitative restriction to cover all rules which are capable of hindering directly or indirectly, actually or potentially, trade within the EU States but at present(Keck and Mithouard case) the ECJ limit Article 28(formerly 30) by drawing the distinction between measures which relate to the goods themselves such as composition, packaging and presentation and measures which relate to selling arrangements. The ECJ hold that only the measures relating to the goods fall within the scope of Article 28(formerly 30) but the measures relating to selling arrangements fall outside the scope of this Article. The ECJ also repeat this distinction in Punto Casa SpA v. Sindaco del Comune de Capena case by holding that the Italian Sunday retail closing rules fell outside the scope of Article 30(now 28) and in Tankstation case by holding that national rules governing the types of products gasoline stations could sell when opened outside the usual retail shop closing times fell outside the scope of Article 30(now 28).
Nonetheless, the word "selling arrangement" is very difficult to understand and may cause some difficulties. If the selling arrangements are the rules relating to when the shops are open and close or the rules relating the length of working time, they may be easy to understand. However, if the selling arrangements are the rules relating to advertising, free offers, and the like, they may be difficult to understand because they may relate much more closely to the products.
The comments above can be illustrated by the GB-INNO-BM v. Confederation du Commerce Lusembourgeois case and the Criminal Proceedings Against Oosthoek's Uitgeversmaatschappij BV case.
In the GB-INNO-BM v. Confederation du Commerce Lusembourgeois case. , the facts were that GB-INNO-BM was a supermarket ch
Notes: In the case, the ECJ also recognize that the degree of public health protection may vary from one Member State to another according to the climate conditions, the normal diet of population and its state of health.
In Oberkriesdirecktor Des Dreises v. Handelsonderneming Moorman case , the facts were that the Federal Republic of Germany maintained its legislation providing for systematic inspection of particular goods passing its border. The ECJ held that where the Community directives provide the harmonization of measures necessary to ensure the protection of animal an human health, recourse to Article 36(now 30) on the protection of health and life of humans animals or plants grounds, is no longer justified. Therefore, Germany legislation violated Article 30(now 28) and could not be justified by Article 36(now 30).
Notes: It is clear from this above case that the more harmonization of law within the Community, the less opportunities the Member States to justify its trade restrictions under Article 30(formerly 36). Therefore, the harmonization of the laws will be one of the best ways to break down the technical barriers because with the harmonization of laws, the Member States could no longer justify their legislation. Article 94(formerly 100) provides the harmonization as follows:
The Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, issue directives for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the common market.
According to Article 94(formerly 100), Council must act unanimously to issue the directives for harmonization of laws among Member States. However, Article 94(formerly 100) authorizes directives, not regulations. Therefore, they have no direct effect. They require Member States to implement into their national laws or regulations within the period of time(normally two years).
(3). The restriction on the protection of national treasures possessing artistic, historic or archaeological value
This ground of Article 30(formerly 36) has not been found to justify restrictions in any cases.
(4). The restriction on the protection of industrial and commercial property grounds
In Deutsche Grammophon Gesellschaft mbH v. Metro-SB-Grossmarkte GmbH Co. KG case , the facts were that Deutsche Grammophon(DG) made and sold them in Germany. It exported records to France where they were marketed by Polydor, a subsidiary of DG. Metro bought records from Polydor and resold them in Germany at prices below the established price. DG claimed that the German law prohibited Metro to reimport the records to France. Metro argued that German law violated Article 30(now 28). The ECJ held that the German law prohibited on the reimportation of DG's records violated Article 30(now 28). It was not justified under Article 36(now 30) on the ground of industrial and commercial property protection.
Notes: The EC Treaty does not define the meaning of industrial and commercial property rights. Therefore, it is difficult for the ECJ to decide whether a national right should qualify on this ground. However, the ECJ may limit this ground of justification by recognizing only the industrial and commercial property rights accepted by a majority number of Member States.
B. The exceptions arising from the ECJ: Mandatory Requirements
Besides the exceptions in Article 30(formerly 36), the ECJ has also recognized the mandatory requirements that Member States should impose on the free movement of goods such as the consumer protection, the environmental protection, the effectiveness of fiscal supervision, the fairness of commercial transactions and the public health as the exceptions to the general provisions of Articles 28(formerly 30) and 29(formerly 34). One of the most important cases for this exception is Cassis de Dijon, Rewe-Zentral AG v. Bundesmonopolverwaltung fur Branntwein .
In the brief words, the facts of Cassis de Dijon were that Cassis de Dijon was a French Liqueur. The Germans prevented it from being marketed in Germany because its alcohol content was too low. The plaintiff attacked this under Article 28(formerly 30) of the EC Treaty. The Germans sought to justify their law because it was needed on three grounds. The first is the protection of public health. The second is the protection of the consumer against fraud. The third is the suppression of unfair competition.
The ECJ held that the fixing of minimum alcohol content fell within the measures having an effect equivalent to quantitative restrictions on imports contained in Article 30(now 28), therefore, it constituted an obstacle to trade. However, the ECJ has recognized the mandatory requirements as the justification of restrictions by holding:
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 defense of the consumer.
This Cassis de Dijon case has caused many problems to the ECJ because Member States seek it to justify their restrictions, while the traders attempt to attack any national laws which restrict trade practices or commercial freedom. However, on the other hand, this case assists to clarify the principle of the free movement of goods under Articles 28(formerly 30) and 29(formerly 34) and its exception under Article 30(formerly 36) of the EC Treaty. In general, there are two principles of laws arising from this case.
The first principle is the Principle of Equivalence. The ECJ stated that:
There is ...no valid reason why, provided that they have been lawfully produced and marketed in one of the Member States, alcoholic beverages should not be introduced into any other Member State; the sale of such products may be subject to a legal prohibition on the marketing of beverages with an alcoholic content lower than the limit set by national rules.
In simple words, this principle provides that if a product meets the standards of Member State of export, that product should be regarded as meeting the standards of the Member State of import. This principle is also confirmed in Italy v. Nespoli and Others case . The ECJ in this case held that as a general rule, if the imports are lawfully manufactured and marketed in one Member State, they are entitled to enter another Member State without obstacles of quantitative restrictions and measures having an equivalent effect.
The ECJ also stressed this principle in Wood-working machines case, Commission v. France by holding that "a Member State is not entitled to prevent the marketing of a product originating in another Member State which provides a level of protection of health and life of humans equivalent to that which the national rules are intended to ensure or establish".
The second principle is the Rule of Reason. The ECJ in Cassis de Dijon held that in case of no Community legislation, the exceptions of the free movement of goods principle arising from the disparities of the national legislations must be accepted if those exceptions are necessary 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 defense of the consumer.
This is also confirmed in the latter case. In German Sausages case, Commission v. Germany , the facts were German law prohibited the sale of sausages containing prohibiting additives in Germany. This law applied to both German products and products from other EC Member States, even though, the additives were not prohibited by the law of origin in Member State. The ECJ held that the ban was an unlawful restriction under Article 28(formerly 30) and could not justified under the rule of reason because consumers could be adequately protected by means of proper labeling of products.
C. Non-Discrimination Principle & Proportionality Principle.
As mentioned above, the four exceptions of Article 30(formerly 36) and mandatory requirements arising from the ECJ judgments impede the free movement of goods notion within the EU. However, the ECJ has narrowly interpreted these exceptions by holding that the restriction of trade must not be discriminatory in goods originating in one Member State from those of the others. Also, it must not be discriminatory in domestic goods from the goods imported from the Member States.
In Conegate Limited v. HM Customs & Excise case , the facts were that the UK law prohibited the importation of love dolls from German, but no regulation prevented their manufacture in the UK. Conegate imported love dolls from Germany to UK and the goods were seized and forfeited. Conegate argued that the UK laws violated Article 30(now 28). The ECJ held that Member States may not rely on grounds of public morality to prohibit the importation of goods from other Member States when its legislation contains no prohibition on the manufacture or marketing of the same goods on its territory. Therefore, UK law was not justified on the grounds of public morality under Article 36(now 30).
Notes: This means that the UK law preventing the importation of particular goods, while at the same time allowing nationals to manufacture such products would amount to discrimination on the ground of nationality.
In Quietlynn Ltd v. Southend Borough Council case , the ECJ held that, if there was no discriminatory effect between foreign and domestic goods, the legislation did not violate Article 30(now 28) because it did not produce discriminatory effects. Therefore, it was in consistent with Community legislation.
In Stoke-on-Trent City Council v. B&Q PLC case , the ECJ held that because there was no discrimination between imports and domestic goods, the UK Sunday trading laws did not violate Article 30(now 28).
In addition to limit these exceptions, the ECJ also holds that all measures seeking to justify the restrictions of goods should be proportionate. Proportionality means that the same result must not be achieved by means of less restrictive measures. For example, if there is the less serious method to protect public or health than a ban of import, that method should be employed. Or, if there is sufficient labeling adequate to protect consumers, the total ban of import should not be employed.
In UHT Milk case, Commission v. UK , the facts were that the UK law limited imports of French UHT milk by means of dealers' licenses on the ground of consumer protection. The ECJ held that the system of dealer's licenses constituted an impediment to the free movement of dairy produce which is disproportionate in relation to the objective pursued and was not therefore justified under Article 36(now 30) of the Treaty. Therefore, UK law violated Article 30(now 28).
In Re: Returnable Containers case, EC Commission v. Denmark , the facts were that Denmark enacted legislation that its National Environmental Protection Agency was only the body in charge with approving the packaging of all beer and soft drinks sold in Denmark. The Commission challenged this legislation. The ECJ held that the requirement that only containers approved by a particular body could be used to contain beer and soft drinks products was disproportionate to the purpose of these mandatory requirements. Denmark legislation therefore violated Article 30(now 28) and could not be justified under mandatory requirements.
In Italy v. Nepoli and others case , the ECJ held that the limitation on the minimum fat content of cheese could not be justified on mandatory requirements concerning consumer protection because consumers could adequately be protected by appropriate labeling of the product.
In German Beer case, Commission v. Germany , the facts were that a German law required that the word "Bier" could only be used for beer produced from malted barley, hops, yeast and water. In other Member States, beer was produced from rice and cereals with some additives. The Commission challenged that the German law violated Article 30(now 28). Germany argued consumer protection because those additives are dangerous. The ECJ held that the compulsory affixing of suitable labels giving the nature of the product sold 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. Consequently, the German law prohibiting the importation of beer was contrary to the principle of proportionality and was therefore not covered by the exception provided for in Article 36(now 30) of the EEC Treaty.
IV. Conclusion and Comments
From the all mentioned above, it is explicit that although the objective and the provisions of the EC Treaty confirm the free movement of goods notion, the freedom to move goods across border without any restrictions has still been impeded. This is because of two obstacles. The first is the interpretation of the ECJ on the general provisions of the free movement of goods. The second is the exception provisions contained in Article 30(formerly 36) of the Treaty itself and the exceptions based on mandatory requirements arising from the ECJ in Cassis de Dijon. These two obstacles hinder the true freedom to move goods across borders. The ECJ and all EU Member States are in the position to break down these obstacles.
Firstly, the ECJ must interpret the general provisions of the free movement of goods as widely as possible.
Under Article 23(formerly 9), in defining the meanings of "goods", the ECJ should define them to cover not only the commercial valued products but also the non-commercial valued products. On the same hand, the ECJ should define "goods" to cover both tangible products and intangible products such as energy etc. For the types of movements, the ECJ should apply the free movement of goods provisions to all types of movements i.e., traders, individuals, commercial transactions and non-commercial transactions.
Under Article 25(formerly 12), the ECJ must take care with the meaning of "charge having an equivalent effect". It must be in very exceptional circumstances according to the four criteria mentioned above that a charge may be held not to be within the scope of Article 25(formerly 12).
Under Article 90(formerly 95), for the meaning of "similar" products, the ECJ should interpret it to cover "substituted products"; for example fish sauce and salt.
Under Articles 28(formerly 30) and 29(formerly 34), for the meaning of "measures having an equivalent effect to quantitative restrictions", the ECJ should still follow its interpretation in the Procureur Du Roi v. Dassonville case to cover all trading rules which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade, except only "selling arrangements", the word arising from Keck and Mithouard case. Furthermore, the ECJ should clarify the meaning of "selling arrangements" and draw the vivid distinction between measures relating to selling arrangements and measures relating to the goods.
Secondly, on the other hand, the ECJ must interpret the exception provisions under Article 30(formerly 36) as narrowly as possible. As in Bauhuis v. Netherlands case , the ECJ held that "Article 30(formerly 36) constitutes a derogation from the basic rule that all obstacles to the free movement of goods between Member States shall be eliminated and must be interpreted strictly".
As early mentioned, the degrees of public morality, public policy, public security, health and life of humans, animals or plants protection and industrial and commercial property protection may vary from one Member State to another because they are for each Member State to determine in accordance with its own scale of values and the requirements of protection. However, the ECJ can limit the scope of their effects by applying the principle of non-discrimination and the principle of proportionality.
Thirdly, the ECJ must narrowly scope the meaning of mandatory requirements, the exceptions arising from Cassis de Dijon because mandatory requirements constitute a derogation from the fundamental principle of the free movement of goods. Therefore, it must be interpreted strictly, not to extend its effects further than is necessary for the protection of the public interests. Moreover, it is generally accepted that it is very hard to tell all of which constitute the mandatory requirements. For example, it is still controversial whether the protection of culture constitutes the mandatory requirements because the culture of one Member State may be totally different or even opposite from that of the others. However, the ECJ can limit its scope by applying the principle of non-discrimination and the principle of proportionality to such restrictions. These two principle must be applied hand in hand. Therefore, even though the restriction is non-discriminatory, if it is not proportionate, it must be unjustified.
Fourthly, in the cases of justification, the ECJ must specify and clarify in every judgments the ground and reason of the justification whether it is under Article 30(formerly 36) or the mandatory requirements. The ECJ should not omit the ground and reason of the justification as in the Cinetheque SA v. Federation Nationale des Cinemas Francais case.
Fifly, the burden of proof to justify the restrictions must be rested with Member State who seeks to justify their restrictions. That Member State must provide the ground for justification, the impact assessment of the restrictions and prove that the measures are non-discriminatory and proportionate.
Sixly, it is clear from the Oberkriesdirecktor Des Dreises v. Handelsonderneming Moorman case that the more harmonization of measures within the Community, the less opportunities the Member States to justify its trade restrictions under Article 30(formerly 36). Therefore, the harmonization of the legislation and directives will be one of the best ways to break down the technical barriers because with the harmonization of the legislation and directives, the Member States could no longer justify their legislation. Also, as early mentioned, the Council is in the power to issue the directives to harmonize the national laws. However, because the Council must act unanimously, it requires the approval of all Member States.
Finally, as mentioned above, technical barriers arising by the exceptions under EC Treaty and the judgments of the ECJ, in the forms of national regulations and standards for marketing goods and measures for the protection of public health and safety are the most significant problems to the free movement of goods. Thus, EU Member States must not exercise trade tactics by avoiding to regulate national laws or set up standards for imports, exports or goods in transit which can create the discriminatory restrictions. Thus, if all EU Member States and the ECJ jointly work through these obstacles, the impossible dream may be reality in some day.
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