Article 34 TFEU provides that:
Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.
A quantitative restriction is a limit on the amount of imports.1 See Riseria Luigi Geddo v. Ente Nazionale Risi, C-2/73, EU:C:1973:89. That limit may be constructed in various ways, by reference to value, physical quantity or some other factor. Examples could be a rule permitting only so many cars to be imported per year or limiting imports of cheese to a percentage of total domestic sales. Quantitative restrictions do not arise often any more: their prohibition is too clear. The second part of Article 34 is rather more important in practice. This prohibits measures which do not actually set a limit to imports, but have the same effect as such a limit. These ‘measures of equivalent effect’ (another name for MEQRs), as they are often called, result in imports being reduced just as if there was in fact an explicit limit.
The case law on Article 34 consists of attempts to define and explain what constitutes a MEQR. The problems of such a definition are twofold. First, a MEQR, by definition, produces its import-reducing effects by a more-or-less indirect path. That can make causation difficult to establish. The first problem is therefore to know, as a matter of fact, which measures actually do result in imports being reduced or are likely to do so. In some cases it may be obvious, but other cases are difficult. The Court of Justice has dealt with this by drawing broad-brush distinctions of convenience between the types of measures that may be expected to obstruct trade or not, as will be seen below in the discussions of Dassonville and Keck.2 Procureur du Roi v. Benoît and Gustave Dassonville, C-8/74, EU:C:1974:82; Keck and Mithouard, C-267/91 and C-268/91, EU:C:1993:905. See also G. Davies, ‘The Court’s Jurisprudence on Free Movement of Goods: Pragmatic Presumptions, Not Philosophical Principles’ (2012) 2 EJCL/REDC 25. The second problem is to decide whether Article 34 is about combating rules with a protectionist effect, or about deregulating economic activity.3 See Chapter 14; Advocate General Tesauro in Ruth Hünermund and Others v. Landesapothekerkammer Baden-Württemberg, C-292/92, EU:C:1993:932. Many measures restrict or reduce economic activity generally: tax rises, rules on transport and advertising, labour regulation. Such measures are likely, therefore, to reduce imports too. However, they do not specifically reduce imports. They do not have any effect on imports that they do not also have on domestic production. On the whole, the Court of Justice excludes such measures from Article 34, although the position is far from entirely clear.4 See Section 4 below.
In the current state of the law, measures potentially within Article 34 can be divided into three groups, each falling within a distinct legal regime. The most recent group consists of measures which concern the way goods are marketed or sold. Whether or not this type of measure is prohibited is decided according to the principles laid down in Keck, discussed later in this chapter.5 See Section 4 below. Perhaps the most important group in practice consists of measures concerning the way products are produced or packaged – their physical specifications. Whether or not these measures contravene Article 34 is decided according to the principles laid down in Cassis de Dijon, also discussed below.6 Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein, C-120/78, EU:C:1979:42 discussed in Section 3 below. The third group consists of measures which affect imports or trade in some way, but do not fall within the other groups. These are measures which cannot be easily captured by the Cassis definition of a product rule or the Keck definition of a selling arrangement. The legality of this third group of measures is decided according to the principles in Dassonville.7 Riseria Luigi Geddo v. Ente Nazionale Risi, C-2/73, EU:C:1973:89. In fact, this is the oldest of the three central goods cases, and is the case which provides the general umbrella definition of a MEQR. In the years immediately after it was decided, it was the starting point for all questions of free movement of goods. However, now that the specialised sub-regimes of Cassis and Keck are well-established, Dassonville has become less important in practice. Nevertheless, a wave of recent cases relying on it to extend Article 34 to new areas show that its principles are in no way defunct.
Mr Dassonville was a Belgian trader who bought Scotch whisky in France and imported it to Belgium for sale there. The reason why he did this was that whisky was much cheaper in France than in Belgium. The French, at the time of the case, did not have as high a disposable income as Belgians, and could not be persuaded to pay as much for whisky. Moreover, while whisky was a fairly well-established tipple in Belgium, it was less so in France, where it had to compete against domestic spirits and aperitifs. A common technique used to enter a new market is to sell the product at a low price initially, and whisky producers and retailers did precisely this. The hope was, of course, that eventually the French would come to love whisky and the price could be raised, and large profits finally made.
However, such market-specific pricing is made very difficult by Article 34, since what is called parallel trading quickly reduces the price differences. People like Mr Dassonville go and buy the goods in the cheap market and sell in the expensive one, until the prices converge. This is possible because, given Article 34, there should be no obstacles to the trading of goods between States.
Nevertheless, Mr Dassonville encountered a problem in the form of a Belgian law on ‘designations of origin’. The law prohibited the import of products bearing such a ‘designation of origin’ without a certificate from the authorities of the State of production to prove that this designation was correct. Thus, whisky labelled as Scotch (from Scotland) could not be imported to Belgium without a certificate of origin from the British customs.
For retailers who imported their whisky directly from the United Kingdom this was not a problem, since the whisky would be delivered with the appropriate certificate if desired. However, such certificates were typically removed at the point of importation, and were no longer attached to the whisky by the time it was on sale within the country. Thus, when Mr Dassonville bought his whisky for a good price in France it came without a certificate. Moreover, it was difficult for him to obtain such a certificate since the goods had already left the United Kingdom. He was therefore in possession of Scotch whisky which could not be lawfully sold in Belgium according to Belgian law. He claimed that this law was a MEQR, and the Court of Justice’s judgment gave what continues to be the standard description of what a MEQR is.
5 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.
6 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 a hindrance to trade between Member States and should, in consequence, be accessible to all community nationals.
7 Even without having to examine whether or not such measures are covered by Article [34 TFEU], they must not, in any case, by virtue of the principle expressed in the second sentence of that article, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.
8 That may be the case with formalities, required by a Member State for the purpose of proving the origin of a product, which only direct importers are really in a position to satisfy without facing serious difficulties.
9 Consequently, the requirement by a Member State of a certificate of authenticity which is less easily obtainable by importers of an authentic product which has been put into free circulation in a regular manner in another Member State than by importers of the same product coming directly from the country of origin constitutes a measure having an effect equivalent to a quantitative restriction as prohibited by the Treaty.
There are four elements of this judgment worth noting: first, the definition in paragraph 5, which continues to be cited in almost unchanged terms, although with the words ‘all trading rules’ replaced in some judgments by the words ‘all rules’ or ‘all measures’.8 See e.g. Commission v. Spain, C-88/07, EU:C:2008:567; Commission v. Germany, C-319/05, EU:C:2007:678; Alfa Vita Vassilopoulos AE and Carrefour Marinopoulos AE v. Elliniko Dimosio and Nomarchiaki Aftodioikisi Ioanninon, C-158/04 and C-159/04, EU:C:2006:562; Van der Laan, C-383/97, EU:C:1999:64; DocMorris, C-190/20, EU:C:2021:609. See for discussion R. Schütze, From International to Federal Market (Oxford University Press, 2017) ch.3. This definition is very broad. It extends a MEQR to include measures which have not yet had any actual effect, but may potentially do so, as well as those whose effect on trade is indirect. Article 34 TFEU applies to any measure which may somehow hinder interstate trade. Yet, the second aspect of the judgment mitigates this. The Court of Justice appears to accept in paragraph 6 that even measures which might fall within its own definition may be permitted if they are ‘reasonable’. This notion was later developed and brought to fruition in Cassis de Dijon. As a result, even though paragraph 5 of the judgment establishes a broad scope of supervision of Article 34, some of the measures caught may in fact ultimately escape its prohibition.
Thirdly, the breadth of the definition can then be understood as an establishment of jurisdiction. By making Article 34 broad, the Court is granting itself equally broad powers to supervise national measures via the preliminary reference procedure, even if in some cases it will find those measures compatible with the Treaty. This was particularly important in a time where the internal market was in its infancy and national protectionist traditions were well-entrenched, while national judges were still often unfamiliar with EU law. Finally, one may note the emphasis in paragraphs 7 to 9 on discrimination. There is no mention of this in the paragraph 5 definition, and yet the Belgian rule is finally ruled incompatible not because it makes all imports difficult, but because it makes imports from France harder than those from the United Kingdom (paragraph 9). The traditional view of free trade agreements, and of Article 34, that they are fundamentally about equal treatment of goods from different States,9 See G. de Búrca, ‘Unpacking the Concept of Discrimination in EC and International Trade Law’ in C. Barnard and J. Scott (eds.), The Law of the European Single Market (Oxford, Hart, 2002) 181. is clearly influential here.
In practice, subsequent case law reflects much of this nuance, and the headline rule of Dassonville is not a complete representation of the law on Article 34 TFEU. Nevertheless, it has been influential, and Regan argues that it should never have been used, since it offers an interpretation which does not fit the text of the Article, nor the intention of the Treaty authors.
In Dassonville, the Court simply announces that all measures that have any tendency to reduce imports are ‘measures having equivalent effect’ to quantitative restrictions. The implicit argument seems to be: ‘Quantitative restrictions reduce imports. Therefore any sort of measure that reduces imports has “equivalent effect”’. This is a bad argument. There are many ways to describe the effects of traditional quantitative restrictions (embargoes and quotas). They do reduce imports. More particularly still, they reduce imports, without reducing domestic production or sales, and their form is such as to ground a (rebuttable) presumption that they are not justified by any positive effects they may have on domestic non-economic values. We now have three descriptions of quantitative restrictions in terms of their effects. Which should the Court choose? The third, the most complete. The Court is going to condemn (presumptively) any measure whose effects fall within its chosen description of quantitative restrictions. So the description it chooses should be complete enough to explain why quantitative restrictions themselves are condemned (presumptively). The description the Court chooses in Dassonville fails this test. Only the third description passes this test. And even though it covers many fewer measures than Dassonville, the third description still encompasses not only border measures other than core quantitative restrictions (which Articles 31 and 32 of the Treaty of Rome, now repealed, suggest were probably the main thing the drafters were thinking about), but also facially discriminatory internal measures (which they may have been thinking about, with GATT Article III in mind), and arguably even the sort of facially neutral measures on products/packaging/labeling covered by Cassis de Dijon.
Most situations to which Dassonville has been applied involve some kind of discrimination or protectionism: either they discriminate against imported products directly, or they create some specific hindrance to cross-border trade which they do not create for internal trade. Examples of this type of measure which have been caught by Article 34 include government campaigns encouraging consumers to purchase domestic goods;10 Commission v. Ireland, C-249/81, EU:C:1982:402; Commission v. United Kingdom of Great Britain and Northern Ireland (‘Marks of Origin’), C-207/83, EU:C:1985:161. rules requiring electricity suppliers to purchase a percentage of their electricity from domestic wind farms;11 PreussenElektra, C-379/98, EU:C:2001:160; Ålands vindkraft AB, C-573/12, EU:C:2014:2037. obligations on petrol importers to maintain a reserve store;12 Commission v. Greece, C-398/98, EU:C:2001:565. requirements to obtain a licence to import certain goods,13 Commission v. Finland, C-265/06, EU:C:2008:210. See also Philippe Bonnarde v. Agence de Services et de Paiement, C-433/10, EU:C:2011:641. even where the licence is a formality granted as of right;14 Ahokkainen, C-434/04, EU:C:2006:609. public tenders requiring goods made according to national standards;15 Commission v. Ireland, C-45/87, EU:C:1997:435. procedures whereby alcoholic drinks could only be imported via certain State-controlled channels;16 Klas Rosengren and Others v. Riksáklagaren, C-170/04, EU:C:2007:313. Also ANETT, C-456/10, EU:C:2012:241. and the charging of motorway tolls to all users, but where national residents could set the costs against tax.17 Austria v. Germany, C-591/17, EU:C:2019:504. It is not necessary that such measures actually exclude imports, as long as they make imports harder or burden imports with extra costs.18 As the Court said in Fra.Bo, ‘the mere fact that an importer might be dissuaded from introducing or marketing the products in question in the Member State concerned constitutes a restriction on the free movement of goods for the importer’.19 Fra.Bo, C-171/11, EU:C:2012:453, para. 22; Philippe Bonnarde v. Agence de Services et de Paiement, C-433/10, EU:C:2011:641, para. 26.
Other measures appear to be neutral between domestic and foreign goods, but closer examination reveals an unequal effect. An example is Commission v. Austria concerning an Austrian rule prohibiting heavy goods traffic from an alpine motorway, on environmental grounds.20 Commission v. Austria, C-320/03, EU:C:2005:684. See also C-591/17 Austria v. Germany. The rule applied, without reference to nationality, to all trucks, but the Commission argued, without being contradicted, that most of the heavy trucks on that road were in fact transiting Austria, and were likely to be foreign or to be carrying foreign goods, while local freight traffic tended to use smaller vehicles.
Another example is rules on pricing, typically setting a minimum price.21 Fachverband der Buchund Medienwirtschafl, C-531/07, EU:C:2009:276; Deutsche Parkinson, C-148/15, EU:C:2016:776; Van Tiggele, C-82/77, EU:C:1978:10. This may be to protect the market structure, by preventing large, low-cost, firms driving out small ones, or it may be to influence consumer behaviour. In Scotch Whisky, minimum alcohol unit prices were intended to reduce binge drinking by eliminating very low-priced alcohol from the market.22 Scotch Whisky, C-333/14, EU:C:2015:845. O. Bartlett and A. MacCullough, ‘Evidence and Proportionality in Free Movement Cases: The Impact of the Scotch Whisky Case’ (2019) 11 EJRR 109. Yet such measures also prevent foreign goods coming from lower-priced countries from exploiting their cost-advantage, and so protect domestic production from imports. Such price controls do thus specifically hinder imports, at least potentially, and are MEQRs.
Recent cases have placed less emphasis on inequality or protectionism, and more reliance on the idea of ‘market access’.23 J. Snell, ‘The Notion of Market Access: A Concept or a Slogan?’ (2010) 47 CMLRev 437; G. Davies, ‘Understanding Market Access: Exploring the Economic Rationality of Different Conceptions of Free Movement Law’ (2010) 11 German LJ 671; L. W. Gormley, ‘Inconsistencies and Misconceptions in the Free Movement of Goods’ (2015) 40(6) ELRev 925–93. One of the leading examples is Commission v. Italy, in which a challenge was brought to Italian rules prohibiting the towing of a trailer behind a motorcycle.24 Commission v. Italy, C-110/05, EU:C:2009:66. See also Commission v. Portugal, C-265/06, EU:C:2008:210; Áklagaren v. Mickelsson and Roos, C-142/05, EU:C:2009:336; Lahousse, C-142/09, EU:C:2010:694; Sandström, C-433/05, EU:C:2010:184. See also the special edition of the European Journal of Consumer Law dedicated to these cases, Gormley, Nihoul and Nieuwenhuyze (eds.), (2012) 2 EJCL/REDC. It was thus not the form of a good, or its sale, that was regulated, but its use by the end purchaser, something that has recurred in several cases since.25 Commission v. Portugal, C-265/06, EU:C:2008:210; Áklagaren v. Mickelsson and Roos, C-142/05, EU:C:2009:336; Lahousse, C-142/09, EU:C:2010:694; Sandström, C-433/05, EU:C:2010:184. Could that amount to an MEQR?
55 In its reply to the Court’s written question, the Commission claimed, without being contradicted by the Italian Republic, that, in the case of trailers specially designed for motorcycles, the possibilities for their use other than with motorcycles are very limited. It considers that, although it is not inconceivable that they could, in certain circumstances, be towed by other vehicles, in particular, by automobiles, such use is inappropriate and remains at least insignificant, if not hypothetical.
56 It should be noted in that regard that a prohibition on the use of a product in the territory of a Member State has a considerable influence on the behaviour of consumers, which, in its turn, affects the access of that product to the market of that Member State.
57 Consumers, knowing that they are not permitted to use their motorcycle with a trailer specially designed for it, have practically no interest in buying such a trailer. Thus, Article 56 of the Highway Code prevents a demand from existing in the market at issue for such trailers and therefore hinders their importation.
58 It follows that the prohibition laid down in Article 56 of the Highway Code, to the extent that its effect is to hinder access to the Italian market for trailers which are specially designed for motorcycles and are lawfully produced and marketed in Member States other than the Italian Republic, constitutes a measure having equivalent effect to quantitative restrictions on imports within the meaning of Article [34 TFEU], unless it can be justified objectively.
The Court’s reasoning here is almost confusingly simple: if consumers can’t use a good, they won’t buy it, and if they don’t buy it, then it will be harder for importers to move their goods on that market. Hence, there is a restriction on market access.
Another market access example is Alfa Vita.26 Alfa Vita v. Elliniko Dimosio and Nomarchiaki Aftodioikisi Ioanninon, C-158/04 and C-159/04, EU:C:2006:212. Greek law required all bakeries to have an area for kneading bread and a flour store, and laid down compulsory specifications for these. A number of supermarkets were prosecuted because they had bakery sections, but did not have these specific rooms. Their defence was that they had no flour and did no kneading: the bread they sold was ‘bake-off’ bread, made from frozen dough, which the supermarket merely had to place in its ovens for a while. The bakery requirements were completely inappropriate to their activities.
Applying the bakery rules to bakeries could be seen as health regulation. However, applying them to supermarkets selling bake-off bread amounted to the imposition of an arbitrary and pointless cost, which undermined the competitive position of that bake-off bread. This would then reduce sales, and so be a restriction on market access.
The underlying politics of this case was that regular bread is always produced locally. Otherwise it would not be fresh. By contrast, frozen dough can easily be imported. Imposing a pointless cost on the potentially imported product had the effect of, to some extent, protecting local bakeries. There was a protectionist element to the rule which even if not discussed by the Court is present in many market access cases. By contrast, some cases, like Commission v. Italy, do not seem to be protectionist at all, but they have a very dramatic effect. They do not just add a small cost to goods, but make them effectively impossible to sell. They are almost a ban by indirect means.
Market access cases thus fall into two groups. Either they effectively prevent market access, and are an MEQR for this reason, or they merely hinder it, but in some unequal and potentially protectionist way.27 See Keck and Mithouard, C-267/91 and C-268/91, EU:C:1993:905; Section 4 below. By contrast, the cases have not yet involved measures which merely reduce sales of all competing goods equally. The language of the Court could be understood to encompass these, but its practice does not. That is probably a good thing, as otherwise Article 34 would be dramatically broad.28 See Davies, n. 23 above. Income tax reduces disposable income, and hence consumer purchases; driving licences and gun licences reduce sales of cars and guns; speed limits and environmental rules add to transport costs, raising the price of goods and so reducing sales; mortgage prices affect how much people can afford to buy for their new homes. It seems unlikely that measures like this should be seen as restrictions on the free movement of goods. Rather, an MEQR is something that prevents import of a product, or in some way puts it at a competitive disadvantage on the market of a Member State.29 Austria v. Germany, C-591/17, EU:C:2019:504. Cf. Áklagaren v. Mickelsson and Roos, C-142/05, EU:C:2009:336; Sandström, C-433/05, EU:C:2010:184; Davies, n. 2 above.
The form of a MEQR has never been something of great significance. The Court of Justice looks at effects, and does not limit Article 34 to any particular type of legal measure. National laws and regulations may be caught, but so may administrative practices without a formal legal basis.30 Commission v. France, C-21/84, EU:C:1985:184; Commission v. Denmark, C-192/01, EU:C:2003:492; Commission v. France, C-212/03, EU:C:2005:313. The question is simply whether some element of the State is doing something that could have the effect of hindering imports. Hence it has been found several times that if the State were to campaign in favour of national products, using appeals to patriotism or chauvinism, or criticising foreign products, this would contravene Article 34 TFEU.31 Commission v. Ireland, C-249/81, EU:C:1982:402; Commission v. United Kingdom of Great Britain and Northern Ireland (‘Marks of Origin’), C-207/83, EU:C:1985:161.
Most notably, in the AGM case, the Court found a mere pronouncement by a public official to comprise a MEQR.32 AGM-COS.MET Srl v. Suomen Valtio and Tarmo Lehtinen, C-470/03, EU:C:2007:213; see N. Reich, ‘AGMCOS.MET or Who Is Protected by EC Safety Regulation?’ (2008) 31 ELRev 85; S. De Vries, ‘Annotation of AGM’ (2008) 45 CMLRev 569. AGM, an Italian company, exported lifting machines to Finland. There was some doubt in Finland as to whether they complied with the safety requirements of Finnish law and of the relevant European standards. After negotiations with AGM, which agreed to make some alterations to the machines, the Finnish Government decided that no further action was necessary. However, there were clearly differences of opinion within the safety authorities, because the safety official who had initially investigated the machines, Mr Lehtinen, went on television in an interview and declared that the machines were dangerous, and did not comply with the relevant Directive. A storm of media interest followed, with newspaper reports about ‘treacherous vehicle lifts’, concern from the Finnish metalworkers union and so on. Inevitably, sales of AGM machines were badly affected.
Mr Lehtinen was not even representing the official position of the Finnish State, and was in fact disciplined for his statements. Nevertheless, the Court found that given his position, people hearing him would reasonably suppose that he was speaking ‘with the authority of his office’. They went on to rule that describing machines as dangerous would hinder access to the Finnish market for those machines – it would make them harder to sell – and so be an MEQR.
The reasoning in AGM seems quite clear. However, it begs the question whether Article 34 TFEU has a de minimis threshold. Not every comment by a civil servant causes as much excitement as Mr Lehtinen’s did. One can imagine acts or statements by individuals or authorities that are in principle negative towards imports, but also too insignificant to merit much concern. Does Article 34 apply?
The Court of Justice’s formal position has always been that there is no de minimis for the application of Article 34.
13 It must be emphasized in that connection that Article [34 TFEU] does not distinguish between measures having an effect equivalent to quantitative restrictions according to the degree to which trade between Member States is affected. If a national measure is capable of hindering imports it must be regarded as a measure having an effect equivalent to a quantitative restriction, even though the hindrance is slight and even though it is possible for imported products to be marketed in other ways.
Thus, if a measure is a MEQR within the Dassonville definition, it is not important that its effect is in fact very small.
However, a quasi-de minimis rule is introduced by the doctrine, consistently present in the case law on goods and on the other freedoms, that measures the effects of which are too ‘uncertain and indirect’ will not be caught by the Treaty.33 Volksbank Romania, C-602/10, EU:C:2012:443; Graf, C-190/98, EU:C:2000:49; Cf. Gormley, n. 23 above.
23 The national court enquires about the compatibility of the Italian legislation with Article [34 TFEU] insofar as it requires Italian vessels to carry costly equipment. It asks itself whether this makes imports of chemical products into Italy more expensive and therefore creates an obstacle prohibited by that article.
24 On this point, it is sufficient to observe that legislation like the legislation in question makes no distinction according to the origin of the substances transported, its purpose is not to regulate trade in goods with other Member States and the restrictive effects which it might have on the free movement of goods are too uncertain and indirect for the obligation which it lays down to be regarded as being of a nature to hinder trade between Member States.
This is potentially important in the light of the recent market access cases discussed above.34 T. Horsley, ‘Unearthing Buried Treasure: Art. 34 TFEU and the Exclusionary Rules’ (2012) 37 ELRev 734; T. M. Jansson and H. Kalimo, ‘De Minimis Meets Market Access: Transformations in the Substance – and the Syntax – of EU Free Movement Law’ (2014) 51 CMLRev 523. In the event that Article 34 is increasingly applied in the future on the basis that a measure has the effect of reducing sales, the rule in Peralta could provide a useful counterbalance, preventing every tax rise or change to public transport becoming subject to Article 34.
Article 34 TFEU only applies to measures hindering imports. If a measure does not apply to imports but only to domestic producers, then it will generally be outside Article 34.35 Mathot, C-98/86, EU:C:2000:663. Thus, in Dassonville, the Court of Justice found that applying the origin-certificates rule to imports was contrary to Article 34, but if the Belgian State had continued to apply that rule only to Belgian drinks brewed in Belgium and bearing origin marks from Belgian towns or regions, this would have been of no interest to EU law. It is true that this approach can lead to reverse discrimination, whereby EU law tolerates a situation in which domestic producers are more heavily burdened by law than importers. However, the Court is unconcerned by this:
As regards the general principle of non-discrimination, it must be observed that community law does not apply to treatment which works to the detriment of national products as compared with imported products or to the detriment of retailers who sell national products.36 Driancourt v. Cognet, C-355/85, EU:C:1986:410, para. 11.
In some, relatively unusual, circumstances even though a measure does not apply to imports it may nevertheless create a problem or disadvantage for them and so comprise a MEQR. Pistre concerned French law on product designations, and the particular designation ‘mountain ham’.37 Pistre, C-321/94, EU:C:1997:229. Apparently ham from pigs that have lived in the mountains is often particularly good, and so in marketing such ham, specific reference is made to its high-altitude origin. To protect the consumer, French law regulated the use of such references. Ham could only be called ‘mountain ham’ if its production complied with a number of rules. However, in practice it was only possible to comply with these rules if the ham was French. They were so formulated that ham even from very high places in other countries would not comply.
Realising that this amounted to discrimination against imported goods, the French Government chose not to apply the rules to imports. It was therefore possible to sell Spanish or Scottish ham in France which bore the word ‘mountain’ on the package, or reference to a specific mountain area, without legal problems. In the case, therefore, it was not an importer, but a French producer who complained. He was being prosecuted for selling French ham bearing the word ‘mountain’ without complying with the rules associated with that name. In his defence he challenged the legality of the French rules. The French Government claimed that since these rules did not apply to imports, Article 34 was not relevant. The Court of Justice disagreed.
43 According to settled case-law, the prohibition laid down in Article [34 TFEU] covers all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade.
44 Accordingly, whilst the application of a national measure having no actual link to the importation of goods does not fall within the ambit of Article [34 TFEU], Article [34 TFEU] cannot be considered inapplicable simply because all the facts of the specific case before the national court are confined to a single Member State.
45 In such a situation, the application of the national measure may also have effects on the free movement of goods between Member States, in particular when the measure in question facilitates the marketing of goods of domestic origin to the detriment of imported goods. In such circumstances, the application of the measure, even if restricted to domestic producers, in itself creates and maintains a difference of treatment between those two categories of goods, hindering, at least potentially, intra-Community trade.
The Court found that the measure contravened Article 34 even though it only applied to domestic products – in fact precisely because it only applied to domestic products. By having a designation with which only domestic ham could comply, French law provided a marketing advantage to national ham over foreign ham. What appeared to be an advantage for imports – not having to comply with national rules – turned out to be a disadvantage when it came to marketing and sale. The mere creation of a distinction between national and foreign products may itself amount to a barrier to imports.38 See G. Davies, ‘Consumer Protection as an Obstacle to the Free Movement of Goods’ (2007) 4 ERA-Forum 55. But cf. Ibérico de cebo, C-169/17, EU:C:2018:440.
EU law often also applies indirectly to internal situations, via national law. Sometimes national law prohibits reverse discrimination, meaning that a court faced with internal facts, as in Pistre, is required by national law to treat the litigant in the same way as they would were she an importer. This means that the court needs to know what EU law would say in the hypothetical situation that the measure is applied to imports. The Court often answers such questions, because the answer is necessary for the national judge if she is to reach her decision. However, the actual situation in question, being internal, is not within the scope of EU law.39 Guimont, C-448/98, EU:C:2000:663; see C. Ritter, ‘Purely Internal Situations, Reverse Discrimination, Guimont, Dzodzi and Article 234’ (2006) 31 ELRev 690.
A variation on the internal situation is the U-turn, whereby goods are exported and then re-imported. This may simply be the result of several sales, from party to party. Sometimes goods are traded quite extensively before reaching the final consumer. However, it may be a deliberate construction, aimed at bringing the goods within Article 34 so that they can benefit from EU law and be exempted from burdensome national rules. In Au Blé Vert, the Court of Justice decided that reimports must be treated as imports, unless it could be shown that the goods were exported for the sole purpose of reimportation, in order to circumvent national legislation. This is doctrinally quite straightforward, but raises very difficult questions of evidence.40 Leclerc v. Au Blé Vert, C-299/83, EU:C:1985:1. Where goods are sold to a trader abroad, and then resold to a new domestic trader, it is a considerable challenge to demonstrate that these were working together.41 Deutscher Apothekerverband v. DocMorris, C-322/01, EU:C:2003:664.
In contrast to the other fundamental freedoms in the Treaty, the Court of Justice has never clearly applied Article 34 to a purely private measure.42 See, generally, H. Schepel, ‘Annotation of Fra.Bo’ (2013) 9 European Review of Contract Law 186; V. Trstenjak and E. Beysen, ‘The Growing Overlap of Fundamental Freedoms and Fundamental Rights in the Case-law of the CJEU’ (2013) 38 ELRev 293; C. Krenn, ‘A Missing Piece in the Horizontal Effect “Jigsaw”: Horizontal Direct Effect and the Free Movement of Goods’ (2012) 49 CMLRev 177; E. Lohse, ‘Fundamental Freedoms and Private Actors’ (2007) 13 EPL 159; R. Babayev, ‘Private Autonomy at Union Level: On Article 16 CFREU and Free Movement Rights’ (2016) 53 CMLRev 979–1005. See also 813–20 and 859. Indeed, its usual position is that ‘Articles [34 and 35 TFEU] concern only public measures and not the conduct of undertakings.’43 Vereniging van Vlaamse Reisbureaus v. ASBL Sociale Dienst van de Plaatselijke en Gewestelijke Overheidsdiensten, C-311/85, EU:C:1987:418. Where companies or individuals act in a way that excludes foreign products, the Court has usually seen this as a matter for competition law.44 See, generally, on the competition/free movement boundary: W. Sauter and H. Schepel, State and Market in EU Law (Cambridge University Press, 2008) ch. 4; K. Mortelmans, ‘Towards Convergence in the Application of the Rules on Free Movement and on Competition’ (2001) 38 CMLRev 613.
This apparent limit to Article 34 is mitigated somewhat by a broad conception of the public. For Article 34 to apply, a body does not have to be formally a part of the government. It is sufficient that it is carrying out a public duty on behalf of the State, or that it is controlled by the State. In Apple and Pear Development Council, a body representing fruit growers ran a ‘buy English apples and pears’ campaign. The council was not a public body, but it enjoyed public law privileges, such as the power to levy fruit growers.
17 As the Court held in its judgment of 24 November 1982 in Case 249/81 Commission v. Ireland, a publicity campaign to promote the sale and purchase of domestic products may, in certain circumstances, fall within the prohibition contained in Article [34 TFEU] …, if the campaign is supported by the public authorities … [I]n fact, a body such as the development council, which is set up by the government of a Member State and is financed by a charge imposed on growers, cannot under Community law enjoy the same freedom as regards the methods of advertising used as that enjoyed by producers themselves or producers’ associations of a voluntary character.
The Court refers here to the Buy Irish case, in which the Irish Government set up a marketing organisation to promote Irish goods.45 Commission v. Ireland, C-249/81, EU:C:1982:402. This was clearly discrimination against foreign goods, but was it attributable to the Irish State? They argued that the body was incorporated as an independent company, acting on behalf of Irish producers, for whose actions the State could not be held accountable.
23 The first observation to be made is that the campaign cannot be likened to advertising by private or public undertakings …, or by a group of undertakings, to encourage people to buy goods produced by those undertakings. Regardless of the means used to implement it, the campaign is a reflection of the Irish government’s considered intention to substitute domestic products for imported products on the Irish market and thereby to check the flow of imports from other Member States.
It is clear that the link between State and organisation does not need to be legally watertight, as long as it is demonstrably real. In this case it was the Irish State that was the object of the Commission’s enforcement action, but given the way the Court in Apples and Pears draws a parallel between that case and the Buy Irish case, it seems likely that it would have been possible to apply Article 34 directly to the Buy Irish organisation itself. This is what happened in the German Quality Products case.46 Commission v. Germany, C-325/00, EU:C:2002:633. German producers complying with various quality rules were able to apply for the right to affix a mark to their goods, ‘German Quality Product’. This was clearly not available to foreign goods, and so amounted to a discriminatory marketing scheme. It was found to violate Article 34 even though the scheme was operated by a non-governmental body, because that body was a product of statute, and so was essentially acting on behalf of and under the auspices of the State.
Fra.Bo is in several ways similar to German Quality Products.47 See Schepel, n. 42 above. It concerned a German body, DVGW, which certified water and gas pipe components as being fit for use and in compliance with the relevant German laws. The complaint was that part of its certification procedure was particularly inaccessible to foreign producers, including Fra.Bo, an Italian producer, making it harder for them to get certified and gain access to the German market. While the body in question was undoubtedly a private organisation, its certificates were recognised in German law, and it was the only body authorised to issue such certificates.
24 It is common ground that the DVGW is a non-profit, private-law body whose activities are not financed by the Federal Republic of Germany. It is, moreover, uncontested that that Member State has no decisive influence over the DVGW’s standardisation and certification activities, although some of its members are public bodies.
25 The DVGW contends that, accordingly, Article [34 TFEU] is not applicable to it, as it is a private body. The other parties concerned consider that private-law bodies are, in certain circumstances, bound to observe the free movement of goods as guaranteed by Article [34 TFEU].
26 It must therefore be determined whether, in the light of inter alia the legislative and regulatory context in which it operates, the activities of a private-law body such as the DVGW has the effect of giving rise to restrictions on the free movement of goods in the same manner as do measures imposed by the State.
27 In the present case, it should be observed, firstly, that the German legislature has established, in Paragraph 12(4) of the ABVWasserV, that products certified by the DVGW are compliant with national legislation.
28 Secondly, it is not disputed by the parties to the main proceedings that the DVGW is the only body able to certify the copper fittings at issue in the main proceedings for the purposes of Paragraph 12(4) of the ABVWasserV. In other words, the DVGW offers the only possibility for obtaining a compliance certificate for such products …
30 Thirdly, the referring court takes the view that, in practice, the lack of certification by the DVGW places a considerable restriction on the marketing of the products concerned on the German market. Although the ABVWasserV merely lays down the general sales conditions as between water supply undertakings and their customers, from which the parties are free to depart, it is apparent from the case-file that, in practice, almost all German consumers purchase copper fittings certified by the DVGW.
31 In such circumstances, it is clear that a body such as the DVGW, by virtue of its authority to certify the products, in reality holds the power to regulate the entry into the German market of products such as the copper fittings at issue in the main proceedings.
32 Accordingly, the answer to the first question is that Article [34 TFEU] must be interpreted as meaning that it applies to standardisation and certification activities of a private-law body, where the national legislation considers the products certified by that body to be compliant with national law and that has the effect of restricting the marketing of products which are not certified by that body.
Notwithstanding its private origins, DVGW was the bearer of public law privileges and power, in the form of unique certification rights, and it was these legal supports which gave it such power over access to the market. The result is thus quite consistent with previous case law. However, it is notable that the Court of Justice is ambiguous in its reasoning. Paragraphs 25 and 26 suggest that private law bodies are subject to Article 34 TFEU whenever they restrict free movement ‘in the same manner as do measures imposed by the state’ which seems like a broadening of the law – albeit not a clear one. When are private measures similar to public measures? If this just means that Article 34 applies when private bodies are linked to the State then the case adds nothing new. However, it could also be suggesting an effects-based approach, in which not the actor but the consequence of their actions is central, as appears to be the case in the other freedoms.48 See Chapter 17, Section 4(ii). It may be that even private parties are subject to Article 34 if they have the power to do what laws so often do, and restrain or discourage other parties from engaging in cross-border contracts with each other.49 G. Davies, ‘Freedom of Movement, Horizontal Effect, and Freedom of Contract’ (2012) 20 European Review of Private Law 805; Babayev, n. 42 above.
A different kind of situation, sometimes called indirect horizontal effect, arises where the State does not actively support market-closing measures, but simply refrains from taking action against them. This first occurred in Commission v. France, in which the Court found that France had violated a combination of Articles 34 and 4(3) TEU (the duty of loyalty) by failing to remove French farmers who were blocking border crossings to prevent imported agricultural goods from reaching the French market.50 Commission v. France (‘Spanish Strawberries’), C-265/95, EU:C:1997:595. The leading case, however, is now Schmidberger, in which the relevant principles have been most clearly developed. In Schmidberger, a group of Austrian demonstrators blocked motorways coming into Austria from Italy, as a protest against the pollution caused by transit traffic in Alpine valleys. This clearly restricted the import of goods by blocking freight traffic, and the Austrian Government therefore had an obligation as in Commission v. France to clear the roads. However, this obligation had to be balanced against the fundamental right to association, which the protesters claimed would be violated by an unmitigated application of Article 34. The question, ultimately, was whether the Austrian Government had behaved in a proportionate and reasonable way in the light of the balance which needed to be struck. The Court found that it had, and provided a very clear framework for the balancing of free movement and fundamental rights.51 See now Regulation 2679/98.
58 The fact that a Member State abstains from taking action or, as the case may be, fails to adopt adequate measures to prevent obstacles to the free movement of goods that are created, in particular, by actions by private individuals on its territory aimed at products originating in other Member States is just as likely to obstruct intra-Community trade as is a positive act.
59 Consequently, Articles [34 and 35 TFEU] require the Member States not merely themselves to refrain from adopting measures or engaging in conduct liable to constitute an obstacle to trade but also, when read with Article [4(3) TEU], to take all necessary and appropriate measures to ensure that that fundamental freedom is respected on their territory. Article [4(3) TEU] requires the Member States to take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of the Treaty and to refrain from any measures which could jeopardise the attainment of the objectives of that Treaty …
69 It is apparent from the file in the main case that the Austrian authorities were inspired by considerations linked to respect of the fundamental rights of the demonstrators to freedom of expression and freedom of assembly, which are enshrined in and guaranteed by the ECHR and the Austrian Constitution …
77 The case thus raises the question of the need to reconcile the requirements of the protection of fundamental rights in the Community with those arising from a fundamental freedom enshrined in the Treaty and, more particularly, the question of the respective scope of freedom of expression and freedom of assembly, guaranteed by Articles 10 and 11 of the ECHR, and of the free movement of goods, where the former are relied upon as justification for a restriction of the latter.
78 First, whilst the free movement of goods constitutes one of the fundamental principles in the scheme of the Treaty, it may, in certain circumstances, be subject to restrictions for the reasons laid down in Article [36 TFEU] or for overriding requirements relating to the public interest, in accordance with the Court’s consistent case-law since the judgment in Case 120/78 Rewe-Zentral (‘ Cassis de Dijon’ ) [1979] ECR 649.
79 Second, whilst the fundamental rights at issue in the main proceedings are expressly recognised by the ECHR and constitute the fundamental pillars of a democratic society, it nevertheless follows from the express wording of paragraph 2 of Articles 10 and 11 of the Convention that freedom of expression and freedom of assembly are also subject to certain limitations justified by objectives in the public interest, insofar as those derogations are in accordance with the law, motivated by one or more of the legitimate aims under those provisions and necessary in a democratic society, that is to say justified by a pressing social need and, in particular, proportionate to the legitimate aim pursued.
80 Thus, unlike other fundamental rights enshrined in that Convention, such as the right to life or the prohibition of torture and inhuman or degrading treatment or punishment, which admit of no restriction, neither the freedom of expression nor the freedom of assembly guaranteed by the ECHR appears to be absolute but must be viewed in relation to its social purpose. Consequently, the exercise of those rights may be restricted, provided that the restrictions in fact correspond to objectives of general interest and do not, taking account of the aim of the restrictions, constitute disproportionate and unacceptable interference, impairing the very substance of the rights guaranteed.
81 In those circumstances, the interests involved must be weighed having regard to all the circumstances of the case in order to determine whether a fair balance was struck between those interests.
82 The competent authorities enjoy a wide margin of discretion in that regard. Nevertheless, it is necessary to determine whether the restrictions placed upon intra-Community trade are proportionate in the light of the legitimate objective pursued, namely, in the present case, the protection of fundamental rights.
The Court of Justice went on to find that the Austrian authorities had not violated Article 34 TFEU. Their actions reflected a justified and proportionate approach to balancing free movement of goods and the right to demonstrate. The factors which influenced the Court in particular were that this was a lawful and peaceful demonstration, approved in advance, for a limited period of time (around thirty hours), and for the purpose of demonstrating a legitimate concern – the protection of the environment. Moreover, the authorities could show that they had considered whether limiting the place and time of the demonstration so that the effect on goods traffic was reduced was a realistic alternative, but had for reasonable grounds come to the conclusion that these would deprive the demonstration of its very purpose and so be an excessive restriction on the right to demonstrate. Finally, once the demonstration was approved the authorities tried to minimise disruption by diverting traffic to other possible routes. In short, the Austrian authorities were a model of good governance, balancing interests in a carefully reasoned way. Schmidberger can be contrasted with Commission v. France, in which the demonstration was explicitly aimed at preventing imports as such yet the French authorities tolerated border closure for an extended and open-ended period, showed little concern about occasional violence by those involved, allowed a climate of fear and hostility to trade to develop and expressed complete passivity over the consequences.
Schmidberger has been criticised because the Court of Justice appears to put the ‘fundamental freedom’ embodied in Article 34, which is essentially about trade, on an equal level with the fundamental rights to free association and expression.52 J. Morijn, ‘Balancing Fundamental Rights and Common Market Freedoms in Union Law’ (2006) 12 ELJ 15. Despite the actual result, it has been argued that the case opens the door to a degradation of the status of fundamental rights. However, as the Court noted, the rights to free expression and assembly are not absolute, and neither is Article 34, so it is hard to see what the Court could have done other than look for an appropriate balance.53 S. A. de Vries, ‘Balancing Fundamental Rights with Economic Freedoms According to the European Court of Justice’ (2013) 9(1) Utrecht LRev 169. However, whether the Court always takes such a rights-friendly stance needs to be considered in the light of cases in the field of services, Laval and Viking, discussed in Chapter 17, Section 4(ii).54 See N. Nic Shuibhne, ‘Margins of Appreciation: National Values, Fundamental Rights and EC Free Movement Law’ (2009) 34 ELRev 230; C. Kombas, ‘Fundamental Rights and Fundamental Freedoms: A Symbiosis on the Basis of Subsidiarity’ (2006) 12 EPL 433.