Art 34 TFEU – Free Movement of Goods:
The introduction of free movement of goods significantly increased inter-EU trade by removing trading restrictions.
Art 34 TFEU:
‘Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.’
Art 36 TFEU:
‘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.’
Art 34 applies in both vertical and horizontal situations (since it is a Treaty provision).
Quantitative Restrictions:
Quantitative restrictions are quotas / bans.
EG: Italy only allowing the import 70 tones of German steel.
EG: Italy not allowing the import of German steel at all.
Interpretation (of ‘Measures having Equivalent Effect’):
CJEU judges have been left with a lot of discretion over the determination of what ‘measures having equivalent effect’ means.
Phase 0 – Protection from Discrimination:
The starting point is that there is a prohibition on discrimination. This means that member states cannot treat foreign products / traders worse than local products / traders.
EG: imported toys requiring special authorisation for sale (while local toys are not subjected to the same requirement).
EG: imported apples subjected to phytosanitary control upon border crossing.
Phase 1 – Expansion (1974-1993):
Over time, the court dramatically widened the scope of Art 34 to cover more than just discrimination.
In DASSONVILLE, the Belgian government requires Scotch Whisky to be supplied with a certificate of authenticity to protect consumers. There is no such requirement in France, so the whisky was cheaper there. An alcohol retail business in Belgium choose to import from France to reduce costs and are fined by Belgian authorities. They challenge this. The CJEU held that the Belgian rule violated Art 34.
[5]: MEQRs = ‘All trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-[Union] trade are to be considered as measures having an effect equivalent to quantitative restrictions.’
In CASSIS DE DIJON, a trader wanted to import Crème de Cassis into Germany. Germany required alcohol liqueurs to be minimum 25% ABV. Crème de Cassis is only around 20% ABV, so couldn’t be sold in Germany under their alcohol laws.
‘Obstacles to movement within the [EU] 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.’
Meaning:
Obstacles to free movement that result from difference between laws of member states are prohibited by Art 34, unless they are necessary to promote public interest objectives.
EG: effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions, consumer protection etc.
Mutual Recognition:
Mutual recognition is the principle that goods lawfully produced in one member state can be sold in all other member states.
EG: if a good produced as ‘alcohol’ in its place of origin, it can be sold as ‘alcohol’ in any other member state.
This is not absolute, but conditional. Where member states wish to impose restrictions, they must be justified and proportionate.
This approach promotes free movement by removing unnecessary regulation, while maintaining national autonomy to regulate where it is necessary and justifiable.
The need for detailed / thorough EU harmonisation is removed.
Problems:
A widened scope significant increases the potential for litigation as companies begin to challenge almost any regulation / national rule.
Examples of Art 34 Litigation:
Prohibition of selling margarine in cube-shaped blocks. (WALTER RAU)
Prohibition of night-time work in bakeries. (OEBEL)
Two-year time limit for commercial exploitation of films after cinematic release. (CINÉTHÈQUE)
Beer purity laws. (C v GERMANY)
Sunday trading bans. (TORFAEN BC v B&Q)
‘art.34 TFEU would evolve into an uncontrollable "economic due process" clause, which allowed traders to potentially challenge all national interferences into the European market.’ [1]
National regulatory power is limited which raises questions of national autonomy and the legitimacy of the EU court. This created a rise in judicial activism within national courts.
The CJEU is pushing Art 34 to its limits – legally uncertain.
Phase 2 – Contraction (1993-2009):
The court narrows the scope of Art 34 back.
In KECK and MITHOUARD, a large French supermarket sought to sell products below purchasing price (to get customers into the store). French law prohibited this (it would draw more customers to larger stores with the financial means to do this to, to the detriment of smaller stores). French authorities brought criminal proceedings against the supermarket for their breaches of French law.
The CJEU redefine the scope of Art 34, excluding its scope from selling arrangements because free movement is not about protecting the volume of sales.
Selling Arrangements: ‘By contrast, contrary to what has previously been decided, the application to products from other MS of national provisions restricting or prohibiting certain selling arrangements is not such as to hinder directly or indirectly, actually or potentially, trade between MS 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 MS.’
Meaning:
Product requirements are always within the scope of Art 34.
EG: Rules on form, size, weight, composition, packaging etc.
Selling arrangements are not within the scope of Art 34, unless discriminatory (in law or fact).
EG: Rules on how products can be marketed.
Examples of Selling Arrangements:
Limitations of shop opening hours. (STOKE-ON-TRENT v B&Q)
Prohibition of online sales. (DEUTSCHER; KER OPTIKA)
Requiring products to be sold in pharmacies. (C v GREECE)
Prohibition of doorstep selling of jewellery. (A-PUNKT v CLAUDIA SCHMIDT)
Restrictions on advertising. (RUTH HÜNERMUND v LANDESAPOTHEKERKAMMER; KONSUMENTOMBUDSMANNEN v GOURMET)
Problems / Consequences:
With a narrowing scope of Art 34, national authority widens once more. Member states thus ‘regained a degree of internal sovereignty’. [2]
The caseload of ECJ reduced due to less litigation.
‘[i]f an obstacle to inter-State trade exists, it cannot cease to exist simply because an identical obstacle affects domestic trade’’ [3]
It has also been argued that Keck has not actually been successful in taming the scope of application of Art 34.
Phase 3 – Re-Expansion (2009-Present):
The court then again re-expands the scope of Art 34.
In ITALIAN TRAILERS, Italian authorities prohibited the use (but not the sale) of trailers in connection with riding a scooter on highways. This was because the trailers made riding the scooters quite dangerous.
Market Access Test: ‘… measures adopted by a Member State the object or effect of which is to treat products coming from other Member States less favourably are to be regarded as measures having equivalent effect to quantitative restrictions on imports within the meaning of [Art 34 TFEU], as are [product requirements].
Any other measure which hinders access of products originating in other Member States to the market of a Member State is also covered by that concept.’
Meaning:
The court maintains the position on discrimination and product requirements as within the scope of Art 34.
The case introduces market access, widening Art 34's scope again.
Criticisms:
The CJEU expanded Art 34 again after narrowing it, essentially backtracking on its own precedent.
There is conceptual ambiguity surrounding what market access is. It is unclear whether market access is a residual test or a completely separate test.
The ruling seems to disregard Keck.
In SCOTCH WHISKY ASSOCIATION, Scotland introduced minimum alcohol unit price legislation. This was in an attempt to help reduce alcohol dependency.
The CJEU held this in violation of Art 34 as it ‘prevents lower cost price of imported products being reflected in selling price to the consumer’. Court, in determining whether the restriction was proportionate, found that the policy was not necessary because there was a less restrictive means available (raising taxes of all alcohol sales).
Note: ECJ left final decision as to justification to domestic courts. SC decided minimum unit pricing was justified and proportionate.
Problem:
While increasing taxes would have been a less restrictive means of achieving the policy objective, the Scottish Government / Parliament has no power to raise taxes in its own right (this matter is reserved to the UK Government).
Constitutional, Political and Socio-economic Consequences – Themes and Challenges:
Anti-protectionism vs economic liberalism.
‘Is [Article 34 TFEU] a provision intended to liberalize intra-EU trade or is it intended more generally to encourage the unhindered pursuit of commerce in individual Member States?’ [4]
Limits to the scope of Art 34, and how to define such limits.
Role of the CJEU.
Standard narrative: market integration process driven by the Court and litigation.
Negative integration ‘bias’. [5]
UK Internal Market in Goods:
UK Internal Market Act 2020:
Due to devolution, there is a potential for trade requirements / restrictions between the constituent countries. After Brexit, EU free movement rules ceased to apply, returning legislative competence to the UK Parliament.
Controversy Surrounding the Bill:
Breach of international agreement (Withdrawal Agreement).
House of Lords ‘regrets that Part 5 of the bill contains provisions which, if enacted, would undermine the rule of law and damage the reputation of the UK’.
Protests from high-level politicians, lawyers and civil servants.
Protests from devolved administrations.
Nicola Sturgeon described the bill as an ‘abomination’.
Scope of the Act:
Free movement of goods.
Free movement of services.
Recognition of professional qualifications.
State aid.
Rules regarding NI Protocol.
Market Access Principles:
Mutual recognition: goods lawfully produced in (or imported into) one part of UK can be sold in any other part.
Non-discrimination: no direct or indirect discrimination of goods from other parts of the UK.
Similarities and Differences with EU Free Movement Principles:
Rather ironically, there are many similar principles to EU free movement law.
Mutual recognition is (quasi-)absolute in UK, with narrow exclusions.
Absolute prohibition of direct discrimination in UK.
Consequences:
Strong litigation rights.
Courts taking centre stage, with political oversight.
Centralisation of regulation, with the de-regulation of unnecessary regulatory measures.
Resources:
References:
[1] Schütze, ‘Of Types and Tests: Towards a Unitary Doctrinal Framework for Article 34 TFEU?’ (2016) 41 European Law Review 826 [2] Schütze, ‘Of Types and Tests: Towards a Unitary Doctrinal Framework for Article 34 TFEU?’ (2016) 41 European Law Review 826 [3] Case C-412/93, Société d'Importation Edouard Leclerc-Siplec v TF1 Publicité SA and M6 Publicité SA (AG Jacobs) [4] Case C-292/92, Ruth Hünermund and others v Landesapothekerkammer Baden-Württemberg (AG Tesauro) [5] Scharpf
Cases Mentioned:
Case C-8/74, Procureur du Roi v Benoît and Gustave Dassonville
Case C-120/78, Rewe-Zentral v Bundesmonopolverwaltung für Branntwein (‘Cassis de Dijon’)
Case C-261/81, Walter Rau Lebensmittelwerke v De Smedt PVBA
Case 155/80, Oebel
Cases 60 and 61/84, Cinéthèque SA and others v Fédération nationale des cinémas français
Case 178/84, Commission v Germany
Case 145/88, Torfaen Borough Council v B&Q plc; Case C-312/89, Union départementale des syndicats CGT de l'Aisne v SIDEF Conforama
Case C-267/91, Reference for a Preliminary Ruling in the Criminal Proceedings against Bernard Keck and Daniel Mithouard (1993)
Case C-169/91, Council of the City of Stoke-on-Trent and Norwich City Council v B&Q plc
Case C-322/01, Deutscher Apothekerverband v 0800 DocMorris NV
Case C-108/09, Ker-Optika bt v ÀNTSZ Dél-dunántúli Regionális Intézete
Case C-391/92, Commission of the European Communities v Hellenic Republic
Case C-441/04, A-Punkt Schmuckhandels GmbH v Claudia Schmidt
Case C-292/92, Ruth Hünermund and others v Landesapothekerkammer Baden-Württemberg
Case C-405/98, Konsumentombudsmannen v Gourmet AB
Case C-110/05, Commission v Italy (‘Italian Trailers’)
Case C-333/14, Scotch Whisky Association
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