What is the meaning of the term 'measure equivalent to a quantitative restriction' for the purposes of Article 28 EC?

University Degree Law

Samantha Nicholson

Seminar Leader – Harm Schepel

European Law – LW511

What is the meaning of the term ‘measure equivalent to a quantitative restriction’ for the purposes of Article 28 EC?

Article 28, whilst appearing relatively clear on first reading, has proved problematic and therefore produced a string of case law and discussion, which continues on today. The Article states “Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.”. This initially seems very clear in its implication. No Member State can restrict the quantity of imports from other member states. It is in the second part, the measures having equivalent effect (MEQR’s) that the problems arise. In order to define the term ‘measure equivalent to a quantitative restriction’ one needs to trace the problems and decisions arising from this issue. This can be discussed in three different sections. Firstly, the definition of an MEQR as it stood in the cases prior to Keck, and Directive 70/50. Secondly the changes created by the decision in Keck and other cases which followed this judgement. Finally, there are the decisions post Keck, and the fact that they have largely regressed to the decisions taken before this case.

MEQR’s can essentially be split into two categories; those that directly or indirectly discriminate against imported goods, and those that are “indistinctly applicable” to the sphere of Article 28. In the former category, one of the bigger decisions is that of Dassonville, which continued to be used in many subsequent cases. The case concerned a Belgian law stating goods bearing a designation of origin must be accompanied by a certificate from the government of the exporting country certifying their right to that designation. Dassonville were a French company who exported Scotch Whiskey and they appealed that it would be very difficult for third party exporters to obtain such a certificate in respect of goods already in free circulation in the third country. The ECJ upheld the Dassonville appeal, stating that the law would impose a greater burden on those seeking to import goods into Belgium, and would therefore hinder free movement, and is consequently a MEQR as prohibited by the Treaty. What is important to note in this decision, is that the ECJ will take a very broad view of measures which hinder the free flow of goods between Member States. In fact it was stated that “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 measures having an effect equivalent to quantitative restrictions.”. This shows that there doesn’t even have to be a discrimination between domestic and imported goods, merely an effect in order to be a MEQR. Another significant point is that of reasonability. The ECJ in this case decided that if a Member State takes measures to ensure no unfair practices and that these are reasonable then it will not be caught by Article 28. However the burden will be upon the Country in question to show that measures taken are reasonable, within a strict criteria. Therefore, based on Dassonville, a MEQR must have an effect hindering the free movement of goods, and unreasonable measures taken by a Member State. This has become known as the “rule of reason”.

Since this case, the ECJ looked at various areas where national rules of the Member States would come into conflict with Article 28. This is somewhat problematic, as Article 28 is there to catch each situation as it arises, nevertheless there are some areas which can be shown as ones in which Article 28 will bite. A clear indication of one of these areas is that of direct import restrictions, in that direct restriction on the import of goods is prohibited. For example, In Commission v Italy, the ECJ held that procedures and data requirements for the registration of imported vehicles which made registration more complicated and costly than that of domestic vehicles are prohibited by Article 28. An extension of this point is in the cases of Rewe. Phyto-sanitary inspections were made on imported consignments of plants, whereas no similar inspections were made on domestically grown plants. The ECJ held that this restricted the import of plants, or even slowed them down so as to create a “gap” between domestic and imported plants. This perhaps shows the ECJ’s aim to take severe steps against any measure creating any kind of barrier to free movement of goods, and here it seems that the ECJ is moving away from the decision laid out in Dassonville. The plants could still easily be imported, there was no need for extra time in storage or any extra cost to the supplier. So it begs the question, where is the “effect”? What the ECJ were perhaps aiming for is that where measures are applied unequally between imported and domestic goods, only when there is not a difference between the goods will effect be considered. When there is an obvious difference in the treatment of goods, as in the case , Article 28 will bite. So it seems that depending on the type of measure taken, the definition of a MEQR will bend to fit, in order to protect the free movement of goods.

Another area where Article 28 becomes engaged is that of the promotion or favouring of domestic products. The main case on this is that of Commission v Ireland. In this case the Irish Government promoted the sale of Irish goods in a variety of different ways, including labelling of produce in shops, and a publicity campaign and an information point telling customers where they could buy Irish products. When brought before the Court, the Irish Government argued several points regarding the funding of the campaign, that are irrelevant to this essay, except to comment that as long as there ...

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Another area where Article 28 becomes engaged is that of the promotion or favouring of domestic products. The main case on this is that of Commission v Ireland. In this case the Irish Government promoted the sale of Irish goods in a variety of different ways, including labelling of produce in shops, and a publicity campaign and an information point telling customers where they could buy Irish products. When brought before the Court, the Irish Government argued several points regarding the funding of the campaign, that are irrelevant to this essay, except to comment that as long as there is an element of funding by the State or State agents, the fact that private funding is also involved is no defence. What is perhaps most unusual about the case is that the Irish government argued that the campaign did not work, as one of their defences. This actually confirms the judgement in Rewe – that it is not only the Dassonville “effect” principle which creates an MEQR and brings it into the sphere of Article 28, but also the intention. This now can be seen to create an area of great complexity – not only does the intention of the member state have to be taken into consideration, but also on a separate part entirely the effect, when deciding whether a measure is an MEQR and when trying to define what an MEQR is.

There are other areas of national measures which fall into the first category above. Measures such as fixing a minimum price on the sale of produce creates a market for loss, and doesn’t make a free, competitive area to trade in. Further to this are measures which make imports more costly or difficult, which is actually another extension of the principles laid down in Rewe.

The second category of MEQR’s is that of indistinctly applicable rules. These are measures that do not have any directly discriminatory effect, in that they do not really differentiate between domestic goods and imports, but they do in fact have the effect of creating some sort of inequality between the two. Article 3 outlines the intent of the Commission as regards the application of Article 28 in these matters. It provides: “That the Directive also covers measures governing the marketing of products which deal, inter alia, with shape, size, weight, composition, presentation, and identification, where the measures are equally applicable to domestic and imported products, and where the restrictive effect of such measures on the free movement of goods exceeds the effect intrinsic to such rules.” In fact this could have been seen as early on as Dassonville, where the definition of a MEQR did not require an element of discrimination.

This application of Article 28 was seen in the landmark case of Cassis de Dijon . In this case, the applicant intended to import the liqueur of “Cassis de Dijon” into Germany from France. German law required that there be a minimum alcohol content of 25% in such liqueurs, and the applicant argued that this amounted to an MEQR as it prevented the French version of the drink to be lawfully marketed in Germany. The Court, in its judgement, affirmed the application of Article 28 to indistinctly applicable rules, (therefore not needing discrimination only inhibition of trade because the national rules were different from the trade rules applicable in the county of origin) , and extending the Dassonville decision. It ruled that once goods had been marketed in one Member state they should be admitted into any other Member State without restriction, unless a good reason can be shown in relation to one of the mandatory defences. This case therefore epitomised a principle of “mutual recognition”, and has proven to be one of the most important cases regarding the attitude of the ECJ towards free movement of goods. It is not only the decision which is groundbreaking in this case, but the more so the reasoning behind it. Up until that point it had never been outrightly stated that the ECJ would not uphold Member State regulations, except only in areas which were subject to harmonisation. In this case, the ECJ have clearly set aside Member State regulations, therefore conveying the attitude that if a State regulation posed an obstacle in any way to free trade, it would be for the State to justify those measures, or it would fall under the sphere of Article 28.

This decision was, in a sense, directly imposing the rule of the EC over that of the Member States with regards to the free movement of goods, even where there is no specific harmonisation between EC and State, thus infringing entirely on the rights of Member States with regards to goods. This reasoning has been used in a plethora of requirements such as definition, packaging, shape, size, expiry date information and labelling in a particular language. In every area, the ECJ applied Article 28. showing the wide scope of this judgement.

This position was maintained, following the judgement in Cassis de Dijon that Article 28 was applicable in almost any situation unless the State could justify itself otherwise. However, the actual decisions of the Court began to show another line of reasoning which, whilst it still followed the same ideology, was more difficult to categorize. There were limits to Article 28, as all rules that concern trade could be said to fall under the ambit of the free movement of goods.. In the Cinetheque case the ECJ, in relation to a French policy to ban the sale or hire of video films for a year after cinema release, decided that although the case may fall under the area of Article 28, there was a defence of objective justification with regard to community law. In this case that was a defence of protection or enhancement of the arts. This however, does not seem to fall in line with the reasoning in Cassis de Dijon. Further to this, in the case of Torfaen, which concerned the violation of Sunday opening trade laws in the United Kingdom, and whether or not that could be an MEQR, the Court found that even though this was entirely under the ambit of Article 28, the laws could escape prohibition provided that the objective was justifiable and proportionate under Community law, and this was for the national courts to decide. This decision again did not rest easy with the conceptual criterion to which it related. It seems that even though these laws fell entirely under the area of article 28, they were in fact being dealt with each on its own merit with no consistently clear line of reasoning. Consequently, what was thought to be a MEQR may not be under this new line of case law, as there could be any number of defences or reasoning to say otherwise.

The decision in Keck redefined the scope of Article 28, perhaps then solving the dilemma that had gone before it. In the case, Keck and Mithouard were prosecuted for selling goods at a loss contrary to French Law. The ECJ in the judgement created a new principle as to what the scope of Article 28 would be. It was found that while it was completely within the scope of Article 28 to prevent any measures which might impede the free movement of goods onto the market, it was in fact also completely acceptable for each Member State to control the how the goods are sold within that market. This is what is known as the principle of dual-burden rules and equal-burden rules. A dual-burden rule is one which imposes a greater burden on imported goods than on domestic products. An equal-burden rule is one which imposes a like burden as regards the selling arrangements of a product, and therefore under Keck, only those which impose a dual burden rule will be caught be Article 28 and are therefore MEQR’s (unless the selling arrangements discriminate in law.)

Despite this clear distinction between what will and will not be a MEQR, the distinction drawn in Keck between rules that go to the nature of a product and and those that relate to the selling arrangements is problematic. There seems to be an area of uncertainty as to what constitutes a selling arrangement, as opposed to the nature of the product, in certain cases. What does the term “selling arrangements” actually mean? It could be said to imply static selling arrangements, that is those rules relating to opening hours, time of work and the type of premises goods may be sold on. Therefore Dynamic selling arrangements, or rather those relating to the ways in which a product can be sold or marketed could therefore be said to be included in the ambit of Article 28 as they relate more closely to the nature of the product, and advertising rules may well hinder intra-Community trade. So even though selling arrangements per se are not considered to be MEQR’s, the ways in which a product is marketed or advertised can be.

Despite these somewhat inconvenient and slightly complex distinctions, it can be said that the Keck ruling went some way to making clear lines under which the operation of Article 28 could apply. The scope of Article 28 covers all areas of the production and import of goods, including their nature, labelling, packaging, and content. It will bite where in any of these areas, the laws of a Member State either directly, indirectly or indistinctly hinder, or interfere with the free movement of that product. However, there will be no claim under Article 28 where the question is one of the selling arrangements in question, and where those arrangements place an equal burden on all parties both domestic and foreign. Therefore even though cases before hand seemed to meander between principles over what would or would not constitute a MEQR, Keck greatly clarified this area, clearly defining what would or would not be caught by Article 28.

However there was an unfavourable reaction to this decision, as it placed too much emphasis on legal and factual equality, whilst ignoring the more important point of market access. There has been therefore a move away from the decision in Keck, back to the area of Cassis de Dijon, thereby giving the ECJ greater powers to rule regarding market-access, in the hope of moving towards a single market. If Keck is an unsatisfactory conclusion, what other way can there be to define the scope of article 28 and what a MEQR actually is? It can be argued that although formalistic in its approach, Keck is a better way forward than the days that preceded it, with unclear decisions and inconsistent reasoning. It created no end of litigants eager to challenge any number of national trade rules, and in the further cases of the Cinetheque case and Torfaen led to a complete uncertainty of the law. Would it not be better to have a clearly defined approach to an area of law so contentious and perhaps important as the free-market, and the rights of individual Member States against the rights of the EC? Keck has given us a clear and concise definition of what a MEQR is, for which has been long striven for, and it would seem illogical to forsake this clarity for a desire to afford the ECJ more powers which could in the long run prove more ineffective.

BIBLIOGRAPHY

Craig Paul and DeBurca Grainne, EU Law Text, Cases And Materials 2nd Ed. (1998) p613
Cases C-267 and 268/91, Criminal Proceedings against Keck and Mithouard [1993] ECR 1-6097, [1995] 1 CMLR 101
Case 8/74, Procureur du Roi v Dassonville [1974] ECR 837, [1974] 2 CMLR 436
Case 154/85 Commission v Italy [1987] ECR 2717
Case 4/75, Rewe- Zentralfinanz v Landwirtschaftskammer [1975] ECR 843, [1977] 1 CMLR 599
Case 249/81, Commission v Ireland [1982] ECR 4005,
Case 120/78 Rewe-Zentrale AG v Bundesmonopolverwaltung fur Branntwein [1979] ECR 649, [1979] 3 CMLR 494
Cases 60 and 61/84, Cinetheque SA v Federation Nationale des Cinemas Francais [1985]ECR 2605, [1986] 1 CMLR 365
Case 145/88, Torfaen BC v B&Q plc [1989] ECR 3851, [1990] 1 CMLR 337

Craig Paul and DeBurca Grainne, EU Law Text, Cases And Materials 2nd Ed. (1998) p613

Cases C-267 and 268/91, Criminal Proceedings against Keck and Mithouard [1993] ECR 1-6097, [1995] 1 CMLR 101

Case 8/74, Procureur du Roi v Dassonville [1974] ECR 837, [1974] 2 CMLR 436

Craig Paul and DeBurca Grainne, EU Law Text, Cases And Materials 2nd Ed. (1998) p617

Case 154/85 Commission v Italy [1987] ECR 2717

Case 4/75, Rewe- Zentralfinanz v Landwirtschaftskammer [1975] ECR 843, [1977] 1 CMLR 599

Case 249/81, Commission v Ireland [1982] ECR 4005,

Craig Paul and DeBurca Grainne, EU Law Text, Cases And Materials 2nd Ed. (1998) p636

Case 120/78 Rewe-Zentrale AG v Bundesmonopolverwaltung fur Branntwein [1979] ECR 649, [1979] 3 CMLR 494

Article 30

Craig Paul and DeBurca Grainne, EU Law Text, Cases And Materials 2nd Ed. (1998) p636

Cases 60 and 61/84, Cinetheque SA v Federation Nationale des Cinemas Francais [1985]ECR 2605, [1986] 1 CMLR 365

Case 145/88, Torfaen BC v B&Q plc [1989] ECR 3851, [1990] 1 CMLR 337

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Edward Smith

17th of Jun 2012

Long but largely accurate summary of the issues in this area of law. However, the writing style this student has adopted would be ineffective in an exam; a much tighter writing style is required. The student would had gained more marks had he/she also made reference to academic commentary.

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