Criminal proceedings against Alfred John Webb
The purpose of this contribution is to analyze the relationship between Article 34 TFEU and national rules regulating when, where, how and by whom a lawfully imported and marketed product may be used. According to that provision, quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.” The Treaty is silent on how one should understand the words “all measures having equivalent effect”. In Dassonville, the Court held that these words cover “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.” This definition is far from being as operational as is sometimes presumed, since it begs at least two questions (Torfaen Borough Council, 1989). First, what measures constitute “trading rules” and, second, how serious an impact must a measure have before it is “hindering” intra-community trade.
In its practice, the Court has attached very little, if any, importance to whether national rules aim to regulate trade in goods or whether they pursue other aims. Indeed, in the case law it uses interchangeably the phrases “trading rules”,1 “all commercial rules”2, “all measures”3, “all rules”4 and “all legislation”5 to the regulatory subject matter of the national rule in question. The Court’s focus is thus on the effects, not the aim or purpose or the subject matter, of the measure in question. Similarly, regarding the second condition that the national measure be capable of “hindering” intra-community trade, the Court has consistently refused in principle to apply any de minimis test under Article 34.6 Measures which affect trade only indirectly or potentially therefore fall within the definition of a trade restriction (Torfaen Borough Council, 1989). Indeed, the Court in several cases has disregarded statistical evidence showing that imports have increased after a measure was introduced, on the basis that imports might have increased even more in the absence of such a measure.
Consequently, the definition of a trade restriction has become almost all-encompassing, and the legality of huge swaths of national rules therefore depend on the proportionally and justification-test enshrined in Articles 34 and 36 (ex art. 30). This in turn reduces legal certainty for both Member States and traders, and implies a significant risk of judicial overload for the Court itself. As the Sunday-trading saga illustrates, the Court is well aware of these concerns and its ruling in Keck, in relation to a particular group of national rules (i.e., selling arrangements), can be seen as an attempt to meet them. Moreover, in another line of cases, the Court in reality has come close to introducing a de minimis test (albeit at a very low threshold level) by holding that the restrictive effects which a national measure has on the free movement of goods may be too uncertain and too indirect for it to be regarded as capable of hindering trade between Member States (Criminal proceedings against Alfred John Webb, 1981). The difficulty of establishing the appropriate scope of Article 34 of the Treaty is illustrated by the fact that while the Keck jurisprudence has been criticized for being too inflexible and unable to catch all genuine barriers to trade, it has been argued that the Krantz case law is too difficult to apply and therefore generates legal uncertainty.
Use restrictions as measures of equivalent effect
Against this background, let us turn to the relationship between Article 34 and national measures which allow the importation and marketing of a given product, but restrict when, where, how or by whom it may be used (hereafter “use restrictions”). Such rules are very common in national legislation. As an example, one could mention a requirement for persons to have attained a particular age before acquiring or using the product, such as a rule preventing minors from purchasing and/or drinking alcohol. The notion also covers rules prohibiting the use of the product in certain places or at certain times, like a ban on the use mobile phones in airplanes or a prohibition on the use of fireworks save for a few days of the year. Other examples would be local planning rules prohibiting the use of a given kind of brick or tile for the construction of houses in a particular area or a ban of certain activities for which a good is normally used, for example a ban on hunting with dogs and horses.
Considering the vast number of such rules, it is important to consider whether use restrictions should be regarded as trade restrictions at all, and if so, how intrusive they must be to be caught by Article 34. Even a prohibition on wearing a particular type of clothing, such as a burka, in public places is arguably covered by this concept. On the one hand, the aim of such rules is normally not to regulate trade. Moreover, they generally do not affect the sale of imported goods more than they affect the sale of domestic goods. Finally, with a literal reading of Article 34 of the Treaty and the Court’s own ruling in Dassonville, it may be questioned how rules which do not limit the importation and marketing of the relevant product, but merely regulate how it may be used after its sale, can be said to constitute “trading rules”( Procureur du Roi, 1974). On the other hand, it is clear that some limitations on how a product may be used can negatively affect sales and import to a very significant extent. Indeed, whereas a prohibition on using mobile phones in airplanes hardly has any such effect, a ban on using fireworks all year except on 31 December is likely to (greatly) reduce demand for, and thus sales and import of, that good. Similarly, one may imagine that a ban on the use of SUVs in congested urban zones would constitute an efficient means for diminishing sales and import of such cars to the benefit of more environmentally friendly vehicles. Still, while it may be relatively easy to accept that rules completely banning the use of a given product constitute measures with equivalent effect to a quantitative restriction, it may be questioned whether rules merely limiting its lawful use need to be subject to a common European judicial control as to their legitimacy, suitability and necessity. To answer this question, it is, in our view, necessary to consider the practical and economic effect on trade of rules restricting the lawful use of goods. An argument can be made that, with the exception of (virtually) complete bans on use, the effects of use restrictions differ fundamentally from the effects of product related rules, and that use restrictions should rather be compared to selling arrangements.
Restrictions of the free movement of goods are prohibited by Art 34 TFEU. Art 56 and Art 57 TFEU provide the same prohibition with regard to the freedom to provide and receive services. Up until now, the case law on restrictions of the free movement of goods has been far more extensive and nuanced, especially with the distinction between “product requirements” and “certain selling arrangements” made in the famous Keck-decision. However, with an increasing case load the Court’s attention seems to have gradually shifted to Art 56 and Art 57 TFEU. Even though goods and services are covered by separate Treaty provisions, it has been argued that the restriction of those two market freedoms requires equal treatment because of their substantial similarities and the fact that they are economically often strongly related. This close relation is, for example, visible in the area of advertising. In answering the question of whether a national ban on advertising is restricting, the focus could lie either on the advertised product or on the advertising service. The Court itself has held that, in the field of telecommunications, it is difficult to determine generally whether it is free movement of goods or freedom to provide services which should take priority, because the two aspects are often intimately linked. As A.G. Jacobs pointed out in Säger, it is sometimes even difficult to distinguish between goods and services. An educational service could for example be provided by sending books or video-cassettes to a recipient in another Member State. In this situation there are both reasons to deal with this situation under Art 34 TFEU, as well as under Art 56 TFEU.
Sometimes a differentiation becomes even more elusive. In situations where only the service itself moves – for example by cable or through the internet – the only difference to the sale of goods is the immaterial nature of the offered service in contrast to the material nature of the good.6 Because of this close relation between goods and services, a different treatment of restrictions according to the choice of legal basis would seem arbitrary in many cases. In this paper, I will analyze the relationship between restrictions of the free movement of goods and the freedom to provide services; Is there a uniform restriction approach under Art 34 and Art 56 TFEU, and can the Keck-distinction between product requirements and certain selling arrangements be transposed into the field of services?( Procureur du Roi, 1974). It arises that both restriction-tests are based on the same principles of mutual recognition and nondiscrimination. Further, there is no need for a separate principle of market access because market access is the aim of the restriction test rather than an independent restriction criterion. Finally, it will be demonstrated that there is a need for the establishment of the categories of service requirements and arrangements for the provision of services under Art 56 TFEU equivalent to the Keck-judgment.
Restriction of the Free Movement of Goods
Art 34 TFEU prohibits quantitative restrictions on imports and all measures having equivalent effect. The wording of the provision, especially with regards to equivalently effective measures, is not inherently clear. As a consequence, the Court of Justice was given great discretion in interpreting and defining the scope of application of Art 34 TFEU. The Dassonville case in 1974 was the first opportunity the Court took to address the question of what national legislation could, in principle, constitute a measure having equivalent effect. The Court decided to give Art 34 TFEU a very broad meaning and stated that such measures are, “all trading rules enacted by Member States which are capable of hindering directly or indirectly, actually or potentially, intra-[union] trade”. In the important decision Cassis de Dijon the Court also established the principle of mutual recognition (Bond van Adverteerders and, 1988). According to this, Member States are prohibited from restricting the sale of goods that have been lawfully produced under the rules of another Member State. The restriction is prohibited even if it results from the application of national regulations that do not distinguish between national and imported products (indistinctly applicable measures). The principle of mutual recognition seeks to prevent putting a double burden on imported products by requiring them to comply with two different sets of rules. If the product complies with the home State rules, any other Member State must in general accept that product on its market.
Controversy arises when the principle of mutual recognition and the principle of home.
State controls are used synonymously. In a broad interpretation mutual recognition is defined as a mechanism of allocation of regulatory competence to the country of origin designed to avoid a dual regulatory burden (Graziana Luisi and Giuseppe Carbone, 1984). Others put the focus on functional parallelism and the created further regulatory space for the host State control through the creation of the mandatory requirements exception. The host State can invoke those mandatory requirements, also known as public interest requirements, to justify the national rule and thus keep its regulatory power. However one wants to look at it, it is clear from the case law that there is no automatic recognition or unrestricted regulatory power of the home State because it is limited by the acceptance of mandatory requirements and the principle of functional equivalence. Therefore whenever home State control is mentioned, it has to be borne in mind that it is just a general assumption of the allocation of regulatory power which can be rebutted.
As a consequence of the extensive interpretation of Art 34 TFEU by the Court in Dassonville, nearly every national regulation could be brought under judicial scrutiny because it potentially constituted a hindrance to trade. While many consider Dassonville to be judicial activism beyond acceptable bounds, it must be seen in the context of the action or non-action of other European powers. Before the Dassonville decision Member States made little systematic effort to remove non-tariff barriers (Graziana Luisi and Giuseppe Carbone, 1984). The unanimity requirement for Council decisions led to political quasi-inactivity in the 1960s. In response, the Commission issued in 1969 the Directive 70/5017 which gave measures with equivalent effect an expansive reading and listed 19 types of prohibited rules and practices. All these factors influenced the Court in taking quasi-legislative action, becoming itself the driving force for the building of a common market. The most important consequence of Dassonville and following cases was that the Court empowered the main interest group for removing trade barriers, the European traders and producers, to challenge national legislation. Therefore, the pressure was on the Member States to justify legislation contrary to Art 34 TFEU.
Limitation by Keck
The Court’s case law constituted a great incentive to move towards a common market, but the breadth of the Dassonville-formula turned out to be a double-edged sword. The formula, which did not seem to provide limits to judicial review, was increasingly used as an instrument to attack any national legislation which stood in the way of free trade – like the famous Sunday trading cases show – and this led to an overload of cases. Moreover, national courts clearly signaled their disagreement with the lack of sensible limits and guidelines by simply not applying the formula. Finally, the Court faced heavy criticism in academic literature. These developments led to the important Keck decision in 1993. In this decision the Court limited the scope of judicial review regarding indistinctly applicable measures by adopting a differentiation suggested by academics (Bond van Adverteerders and, 1988). The differentiation was made between product requirements on the one hand, which regulate the composition, packaging or presentation of a product, and certain selling requirements on the other, which only regulate the place, time and manner of selling products.
According to the Court, product requirements are always considered to have equivalent effect to a quantitative restriction on trade, because they put a double burden on foreign products which already had to comply with their national requirements. In contrast, certain selling arrangements do not fall within the scope of Art 34 TFEU, 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 those from other Member States. This is because they do not prevent the access of foreign goods to the market or impede the access of foreign goods more than they impede the access of domestic products. With Keck the Court moved on from its approach in Dassonville and decided that, whereas the producing State is responsible for rules on product requirements which have to be recognized by the importing State (which had already been decided in Cassis), the importing State has in general the sole regulatory competence regarding certain selling arrangements provided that they do not discriminate products from other Member States in law or in fact. With the decisions in Cassis and Keck and the creation of mandatory requirements, the Court established a complex framework for the split in competence between the home State and the host State. Even though the Keck-decision was much criticized, the court nevertheless continuously applied the established distinction between product requirements and certain selling arrangements in later cases (Manfred Säger, 1991). It ruled, for example, that there was no breach of Art 34 TFEU in cases of time limitations to the sale of goods or the provision that certain products can be sold only by licensed retailers. Nevertheless, if the selling arrangement is either discriminatory (in fact) or capable of imposing a double burden33, the Court will find a breach of Art 34 TFEU (Bond van Adverteerders and, 1988). Although the distinction has its shortcomings, especially because certain measures, such as advertisement regulations, cannot be put in one of the two categories, the Court has continually and successfully applied the Keck framework until today. However, in addition to the distinction between product requirements and certain selling arrangements, the rather elusive notion of “market access” and “market access test” has played a more and more prominent part in the academic discussion and in the Court’s case law. Two recent cases – Commission v. Italy (trailers) and Mickelsson and Roos36 – have given again cause to argue that the Court has put the focus back on a purely nondiscriminatory market access approach. I will now first analyze the notion of market access and then address the question of whether a market access test fulfills a separate function beside the distinction between product requirements and certain selling arrangements. I contend that the case law on market access can be traced back to the same principles that underlie the Keck-case law, being non-discrimination and mutual recognition, and that there is thus no need for a restriction test based on market access.
Case 8/74, Procureur du Roi v. Benoît and Gustave Dassonville,  ECR 837
Case 33/74, J.H.M. Van Binsbergen v. Bestuur van de Bedrijfsvereniging voor de Metaalnijverheid,  ECR 1299
Case 74/76, Iannelli & Volpi SpA v. Ditta Paolo Meroni,  ECR 557
Case 279/80, Criminal proceedings against Alfred John Webb,  ECR 3305
Joined Cases 286/82 & 26/83, Graziana Luisi and Giuseppe Carbone v. Ministero del Tesoro,  ECR 377
Case 188/84, Commission v. France (woodworking),  ECR 419
Case 352/85, Bond van Adverteerders and others v. The Netherlands State,  ECR 2085
Case C-145/88, Torfaen Borough Council v. B & Q plc,  ECR 3851
Case C-288/89, Stichting Collectieve Antennevoorziening Gouda and others v.
Commissariaat voor de Media,  ECR I-4007
Case C-76/90, Manfred Säger v. Dennemeyer & Co. Ltd,  ECR I-4421