Article 28 is the principal provision in the treaty designed to eliminate national barriers to the free movement of goods that are not fiscal in character. It helps to create an economic area in which market forces operate freely without the restraint of national boundaries. It has been developed by the court into a broad anti-protectionist charter. Furthermore, Article 28 has been used to challenge national rules that apply equally to domestic and imported goods, such as those governing the permitted ingredients of foodstuffs1. However, the question is particularly concerned with the second limb of the Article 28 definition. The majority of the case law and writing on Article 28 has concentrated on the second limb, the notion of the measure having equivalent effect to the quantitative restriction2. The cases arising from Article 28 are considered complex because of the difficulties, which have arisen from cases in which there is no apparent discrimination. These are cases where the Member State has adopted measures restricting imports, which apply equally to imports and domestic products3. However, the ECJ has played a significant role to resolve the problems in relating to Article 28 case law and it has been discussed as follows.
The prohibition is twofold in Article 28:
1) Quantitative Restriction
2) Measures of equivalent effect to quantitative restrictions
A quantitative restriction is a national measure that restrains the volume or amount of imports or exports, not by artificially raising the costs of importing or exporting, but by placing direct or indirect limits on the physical quantity of the imports or exports that may enter or leave the market4. The most common example of a quantitative restriction is a quota5. Moreover, the ECJ had interpreted the quantitative restrictions ‘as any measure which amounts to a total or partial restraint on imports, exports or goods in transit’6. They would clearly include a ban on imports such as: ban on pork imports7, ban on imports of pornographic materials8, and also a quota system9. However, the Ditlev Bluhme Case10 confirms that a ban on imports operates as a quantitative restriction even if the prohibition extends to only part of a Member State’s territory11.
Measures having equivalent effect to quantitative restrictions: this expression is much broader than quantitative restrictions and its interpretation has been the subject of many decisions of the European Court of Justice, which constitute the main ‘acquis’ in this
area of EC law12. The measures have included regulatory measures designed to enforce minimum standards, for example, of size, weight, quality, price or content, to tests and inspections or certification requirements to ensure that goods conform to these standards, to any activity capable of influencing the behaviour of traders such as promoting goods by reason of their national origin13. However, the commission had passed Directive 70/50 to offer state guidance as to the meaning and scope of measure having equivalent effect to quantitative restrictions14. Article 2(3) of the Directive provided non-exhaustive lists for it15. These are divided into:
A)‘Measures, other than those applicable equally to domestic or imported products’, i.e., distinctly applicable measures as described in Article-2 (1)16.
B) ‘Measures, which are equally applicable to domestic and imported products’, i.e., indistinctly applicable measures (Article-3)17. These measures are only contrary to Article-28 where the restrictive effect of such measures on the free movement of goods exceeds the effects intrinsic to trade rules. Indeed, in the important case of Procureur du Roi v. Dassonville18, the court of justice set out an interpretation on the meaning and scope of measures of equivalent effect.
‘All trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intracommunity trade are to be considered as measures having an effect equivalent to quantitative restrictions’19.
Two important aspects of this are the emphasis on the effect of a measure having, or importantly, merely potentially having, effect on trade, and the fact that there is no need for discriminatory intent. A restriction to intra-community trade is also necessary20.
This principle has been confirmed in the Court’s Case Law, although with minor variations: for instance, the term “trading rules” does not usually appear nowadays and the court sometimes speaks of obstacles “to imports between Member States” rather than to “intra-Community trade”21. In any event, it is clear from this formula that one must look to the effects of a measure rather than to its aims, in deciding whether it falls under Article 2822.
Article 28 requires proof of a hindrance to trade23. There is no breach of Article 28 when a measure which is not capable of hindering trade between Member States as it affects
merely the flow of trade within a Member State24. In Quietlynne Ltd v. Southend Borough Council25, where a licensing requirement for the sale of sex appliances by sex shops was held not to breach Article 28, since the goods in question, which included imported goods, ‘could be marketed through other channels’.
The issue of measure in Dassonville was a requirement, under Belgian law, that imported goods should carry a certificate of origin issued by the State in which the goods were manufactured26. In this case, the claimant argued that the Belgian regulation was contrary to EC Law. However, the ECJ applied the Dassonville formula on a reference from the Belgian court and found the measure was capable of breaching the Article 2827. Similarly, in the cases of Tasca28 and Van Tiggele29 the Dassonville test was applied in the context of a domestic law imposing maximum and minimum selling prices respectively. The laws were indistinctly applicable. The ECJ found that both measures were capable of breaching Article 28, having applied the Dassonville test30. Furthermore, the court did not distinguish between distinctly and indistinctly applicable measures in applying the Dassonville formula in these cases, and ignored the proportionality test laid down for the latter in Directive 70/5031.
The Dassonville formula was developed further in the Casis de Dijon32 case, which laid down two principles. The principle of equivalence, that is, that once a product had been lawfully produced and marketed in one Member State, it should be able to move freely within the community without impediment33 (also known as the principles of mutual recognition34). In Prantl35, where it was held that as long as the Italian wine was in accord with fair and traditional practice in its State of origin there was no justification for its exclusion from Germany.
The Casis decision also established a further rule, often known as the rule of reason.This restricts the free movement of goods that arise from national marketing rules, which may be permissible where the national rules are necessary to satisfy mandatory requirements36. The mandatory requirements identified in Casis37 such as: the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions, consumer protection and the protection of national or regional socio cultural characteristics38. This is not an exhaustive list and includes the protection of the environment39. However, distinctly applicable measures can not be justified by mandatory requirements40. The mandatory restrictions are only permitted if they are non-discriminatory and proportionate to the achievement of one of the legitimate aims set out in the above case41. The approach of the ECJ was confirmed in Gilli v. Andres42, in which a national measure prohibited the selling of vinegar containing acetic acid unless produced by the acetic fermentation of wine. It was held that such legislation contravened Article28 because it discriminated against goods, which did not satisfy the national requirement for vinegar43. However, the ECJ laid down the concept of mandatory requirements as a non- exhaustive list of protected interests in the framework of Article 2844. In contrast, Article 30, as derogation to the general principle, has to be applied in a restrictive manner and establishes an exhaustive list of grounds for derogation45.
The case of Casis de Dijon had started to cause the ECJ problems because member states sought to justify the restrictions and by traders to attack virtually any nationally imposed restriction on trade practices or commercial freedom, particularly where rules were not just aimed directly at imports46. Mainly, the complex litigation has arisen from this area of law. For example: Dutch laws restricting the use of free gifts for promotional purposes47; French laws prohibiting the door to door selling of educational materials48; English laws requiring the licensing of sex shops for the sale of sexual appliances49; laws prohibiting ‘eye-catching’ price comparisons as in Rocher50; and a number of cases such as Torfaen Borough Council v. B & Q Plc51 pleading the illegality under the Article 28 of national rules limiting Sunday trading. In all of these cases the legality of these measures under EC law was ultimately upheld on the grounds that Article 28 was not applicable, more often following the application of the rule of reason52. As discussed above, the case law has not been consistent here53.
Furthermore, national courts face great difficulties in applying a rule of reason in the Sunday trading cases, particularly when there exist a number of possible justifications for the measure being challenged but its harmful effect on trade between member states is minimal54. A national judge may be reluctant in these circumstances to entertain a challenge to domestic legislation based on its lack of proportionality55. These problems surfaced in the Sunday trading cases56. However, the ECJ found the rules might be justified to ensure that working hours be arranged to accord with national or regional socio-cultural characteristics and referred to examine the rules in the light of their proportionality57. Unfortunately, the grounds for justification permitted to protect such socio-cultural characteristics were not spelt out; nor was any guidance offered on the question of proportionality. Thus various British courts dealing with different cases came to different conclusions58. The courts concluded that the socio-cultural purpose of the rules was to protect workers who did not want to work on Sunday and not surprisingly concluded that the rules were disproportionate59. Those that thought the rules as designed to ‘preserve the traditional character of the British Sunday’ legitimately concluded otherwise. As the rules were not more that was necessary to achieve that end60. In spite of the clear ruling of the court in two cases that similar rules would be permissible under the rule of reason, Torfaen Borough Council v. B & Q Plc61 and Marchandise62. The question of the legality of the English Sunday trading rules was only decided conclusively when the ECJ, following a reference from the House of Lords in Stoke-on-Trent City Council v. B & Q Plc63, applying the first Casis principle, found that the rules were justified and not disproportionate. Furthermore, the member states have the discretion to make such choices. Thus there is no breach of Article 28 by Sunday trading rules.
In the light of criticism and confusion, the Court of Justice found it necessary to ‘re-examine and clarify its case law’ on the application of Article 28 and it did so in Keck & Mithouard64. In this case, a French law prohibiting the sale of goods at a loss was challenged as a breach of Article 28. The ECJ got an opportunity to redefine the principles applying in this area. First, it reasserted the principles in the Casis de Dijon case and stated that, in the absence of harmonising legislation, obstacles to the free movement of goods which are the consequence of applying rules that lay down requirements (such as those relating to designation, form, size, weight, composition, presentation, labelling, packaging, etc) constitute measures of equivalent effect prohibited by Article 28 of the EC treaty65. This prohibition applied even if those rules operated without distinction to all products, unless their application could be justified by a public interest.
The court then drew a distinction between these types of rules and selling arrangements prohibiting or restricting commercial activities. These arrangements did not constitute obstacles to trade as long as the provisions in question, applies to all relevant traders operating within the national territory and as long as they did not cause discrimination, in law or in fact, between the marketing of domestic products and those from other member states66. As long as these conditions are satisfied, the application of rules relating to selling arrangements does not impede or prevent the access to a national market for foreign goods any more than they will impede the access of domestic products. As a consequence, such rules fall outside the scope of Article 28 of the EC treaty67.
In addition to rules on selling arrangements, other national rules have been held to fall outside the scope of Article 28. This can be either because they have no connection with the importation of the products in question68or because their effects on trade between member states are too uncertain and indirect69.
Furthermore, this new approach to Article 28 was affirmed, on the same grounds, shortly after Keck, in Hunermund70 where it was held that the rule did not breach to Article 28 even without applying the Casis test. In commission v. Greece71 and Belgapom72 adopted the same approach. In the first case it was identified that rules, which required processed milk for infants to be sold only pharmacies and in second case rules prohibiting sales yielding very low profit margins were permissible under Article 28 without resort to the rule of reason73.
On the other hand, the move towards a more ‘formalistic’ approach towards Article 28 initiated in Keck has been both criticised as lacking in principle and acclaimed for its ‘tendency to cut back on unnecessary intrusions into the laws of the member states in cases where access to the relevant national market is not at stake’74. Furthermore, there is no doubt that the formalistic approach introduced in Keck creates uncertainty. The ambit of the phrase ‘certain selling arrangements’ is unclear75. One particular problem area in this context is that of advertising76. However, it seems that a more appropriate way to view Keck is, as the advocate-general in Volker Graf77suggested, to consider the view that selling arrangements are harmless in internal market terms as a rebuttable presumption rather than as a rule. Thus, even now, nearly a decade after the decision, the jury seems still to be out on Keck.
In conclusion it seems that the ECJ has played an important rule in resolving the question of the legality of the English Sunday trading cases and has decided conclusively in Stoke-on-Trent City Council that the rules were justified and not disproportionate. By the introduction to the rule of reasons to such measures and the extension of the two principles stated in the Casis de Dijon case, the court has to try to balance the need of applying Article 28 with the need to respect the mandatory requirements justified under Article 30. Furthermore, with the refinement of the Keck case, it can be concluded that the Casis de Dijon line of case law is essentially favourable to the community objective of the unified market by encouraging the free movement of other member state products, which may have no direct equivalent in the host market and thus be subject to a ban which would not apply to any of the host state’s products.
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1 See, Weatherill, S. & Beaumont, P, EU Law, 3rd edn, 1999.p-500
2 See, Steiner, J & Woods, L, Text Book on EC Law, 7th edn, 2001,p-157
3 See, Shaw, J, Law of the European Union, 2nd edn, 1996, p-194.
4 See, Weatherill, S, Cases & Materials on EC Law, 4th edn,1998, p-239.
5 See, International Fruit Co. NV v. Produktschap voor Groenten en Fruit (cases 51-4 / 71)
6 See. Riseria Luigi Geddo v. Ente Nazionale Risi (case 2/73).
7 See, Commission v. Italy (case 7/61)
8 See, R v. Henn (case 34/79)
9 See, Salgoil SPA v. Italian Ministry for Foreign Trade (case 13/68)
10 See, (case C-67/97)
11 See, Vincenzi, C & Fairhurst, J, Law of the European Community, 3rd edn, 2002.
12 See, Kent, P, Law of the European Union, 2nd edn, 1996, p-98.
13 See, Apple & Pear Development Council v. K. T. Lewis Ltd (case 222/82) and Commission v. Ireland (Re ‘Buy Irish’ Campaign) (case 249/81).
14See, Farrell L, European Community Law, HLT, 1997
15 See, Steiner, J & Woods, L, Text Book on EC Law, 2001, p-154.
16 See, Shaw, J, Law of the European Union, 2nd edn, 1996, p-194
17 See, Collins L, European Community Law in the United Kingdom, 5th edition, 2001,p-203
18See, Case (8/74)
19 See, Weatherill, S, Cases & Materials on EC Law, 4th edn,1998, p-230.
20 See, Oliver, P, Free Movement of Goods in the EC, 3rd edn, 1996,p-81.
21 See, Evans A, A Textbook on European Union Law, 1st edition, 1998,p-189
22 See, Weatherill, S. & Beaumont, P, EU Law, 1999,p-504.
23 See, Steiner, J & Woods, L, Text Book on EC Law, p-155.
24See, Oebel (case 155/80)
25 See, (case C-23/89)
26 See, Oliver, P, Free Movement of Goods in the EC, 3rd edn, 1996,p-131.
27 See, Evans A, A Textbook on European Union Law,1998,p-203
28 See, (case 65/75).
29 See, (case 82/77)
30See, Steiner, J & Woods, L, Text Book on EC Law, p-156.
31 See, Cracknell D G, European Community Law, Old Bailey Press, 2nd edition, 1997
32 See, Rewe-Zentral AG v. Bundesmonopolverwaltung fur Branntwein (case 120/78)
33 See, Oliver, free movement of goods, para-6.79; 11.p.569
34 See, communication from the commission to the council and the European parliament mutual recognition in the context of the follow up to the action plan for the single market (COM/99/0299 final)
35 See, (case 16/83) & Deulsche Renault AG v. Audi AG (case C-317/91).
36 See, Shaw, J, Law of the European Union, 1996, p-194
37 See, Cockfield F A, European Union: Creating the Single Market, Wiley, 1st edition, 1994
38 See, Torfaen Borough Council v. B & Q Plc (case 145/88) & Cairns W, Introduction to European Union Law, 1997.
39 See, EC commission v. Denmark (1988)
40 See, EC Commission v. Ireland (1981).
41 See, EC commission v. Germany (RE German sausages 1989).
42 See, (case 788/79)
43 See, Craig P / De Burca G, EU Law: Text, Cases and Materials, 3nd edition, 2002, p-245.
44 See, Steiner, J & Woods, L, Text Book on EC Law, p-158.
45 See, Kent, P, Law of the European Union, 2nd edn, 1996, p-103.
46 See, Steiner, J & Woods, L, Text Book on EC Law, p-162.
47 See, Oosthoek’s uitgeversmaat schappij BV (case 286/81)
48 See, Buet v. Ministere Public (case 382/87)
49 See, Quietlynn Ltd v. Southend Borough Council (case c-23/89)
50 See, (case C-128/91)
51 See, (case 145/88)
52 See, Weatherill, S, Cases & Materials on EC Law,1998, p-282.
53 See, Steiner, J & Woods, L, Text Book on EC Law, p-162.
54See, Oliver, P, Free Movement of Goods in the EC,p-97.
55 See, Hoffmann J in Stoke-on –Trent City Council v. B & Q Plc (1991) ch 48.
56 See, Steiner, J & Woods, L, Text Book on EC Law, p-163.
57 See, Torfaen Borough Council v. B & Q Plc (case 145/88)
58 See, Steiner, J & Woods, L, Text Book on EC Law, p-163.
59 See, B & Q Ltd v. Shrewsbury & Atcham Borough Council (1990) 3 CMLR 535.
60 See, Wellingborough Borough Council v. Payless Diy Ltd (1990) 1 MLR 773
61 See, Conforama (case C-312/89)
62 See, (case C-332/89)
63 See, (case C- 169/91)
64 See, (cases C-267 &268/91)
65 See, Weatherill, S. & Beaumont, P, EU Law, 1999,p-609.
66 See, Steiner, J & Woods, L, Text Book on EC Law, p-164.
67 See, Alston, P, The EU and Human Rights, 1999.
68 See, case 155/80, Oebel and case 75/ 81, Blesgen.
69 See, case 69/88, krantz, case 93/92, Motorradcenter, case C–379, Peralta and case C–44/98, Basf
70 See, (case C – 292/92)
71 See, (case C-391/92)
72 See, (case C-63/94)
73 See, Oliver, P, Free Movement of Goods in the EC,p-145.
74 See, Steiner, J & Woods, L, Text Book on EC Law, p-165.
75 See, Weatherill, S. & Beaumont, P, EU Law, 1999,p-608.
76 See, Leclerc–Siplec (case C-412/93)
77 See, (case C-190/98)