COMMISSION NOTICE

Guide on Articles 34-36 of the Treaty on the Functioning of the European Union (TFEU)

(Text with EEA relevance)

(2021/C 100/03)

PREFACE

The long-term action plan for better implementation and enforcement of single market rules (hereinafter ‘Enforcement Action Plan’) (1), adopted in March 2020, puts the single market and its enforcement at its core. To improve compliance and avoid market segmentation, Action 1 of the Enforcement Action plan foresees that the Commission will provide more specific guidance tools for national authorities and stakeholders. It also foresees the update of the Guidance on the application of Articles 34-36 TFEU.

Hence, it is in this context that the Commission has updated this Guidance. This document intends to facilitate the application of EU law on the free movement of goods, step up enforcement, and contribute to the benefits that the Internal Market for goods can bring to EU businesses and consumers. It intends to provide a better understanding of the application of Articles 34-36 of the Treaty on the Functioning of the European Union (TFEU) in light of the most relevant jurisprudence of the Court of Justice of the European Union (CJEU) in this area. It also intends to reinforce a coherent application of the principle of the free movement of goods throughout the Internal Market, helping addressing any remaining obstacle and preventing new ones to raise.

This guide builds on the previous edition of 2009 (2) and incorporates the most relevant CJEU jurisprudence of the last eleven years to ensure it provides a comprehensive and up-to-date overview of the application of Articles 34 to 36 TFEU. However although it summarises the relevant case law and provides supplementary commentary, it cannot be considered exhaustive. The guide is not a legally binding document.

EU legislation and rulings mentioned in this guide can be found in Eur-Lex (3), and judgments of the Court are also available on the webpage of the CJEU (4).

TABLE OF CONTENTS

1 THE ROLE AND IMPORTANCE OF THE FREE MOVEMENT OF GOODS IN THE INTERNAL MARKET 41

2. THE TREATY PROVISIONS 41

3. THE SCOPE OF ARTICLE 34 TFEU 42

3.1. General conditions 42

3.1.1. Non-harmonised area 42

3.1.2. Meaning of ‘goods’ 42

3.1.3. Addressees 43

3.1.4. Active and passive measures 44

3.2. Territorial scope 45

3.3. Cross-border trade 45

3.4. Types of restrictions under Article 34 TFEU 46

3.4.1. Quantitative restrictions 46

3.4.2. Measures of equivalent effect 46

3.4.2.1. Restrictions on use 47

3.4.2.2. Discriminatory selling arrangements 48

3.5. The Mutual Recognition principle 49

4. TYPES OF MEASURES 51

4.1. National provisions related to the act of import (import licences, inspections and controls) 51

4.2. Obligations to appoint a representative or to provide storage facilities in the importing Member State 51

4.3. National bans on specific products/substances 52

4.4. Price measures 53

4.5. Authorisation procedures 55

4.5.1. Type approval 55

4.5.2. Car registration 56

4.6. Advertising restrictions 56

4.7. Technical regulations containing requirements as to the presentation of goods (weight, composition, presentation, labelling, form, size, packaging) 57

4.8. Indications of origin, quality marks, incitement to buy national products 58

4.9. Restrictions on distance selling (internet sales, mail order, etc.) 59

4.10. Deposit obligations 59

4.11. Reimbursement and parallel imports 60

4.12. Obligation to use the national language 62

4.13. Restrictions on the importation of goods for personal use 62

5. AGRICULTURAL PRODUCTS 63

6. EXPORT RESTRICTIONS (ARTICLE 35 TFEU) 64

6.1. Definition of ‘Exports’ 64

6.2. Quantitative restrictions and measures having equivalent effect 64

7. JUSTIFICATIONS FOR RESTRICTIONS TO TRADE 66

7.1. Article 36 TFEU 66

7.1.1. Public morality, policy and security 67

7.1.2. Protection of the health and life of humans, animals and plants (precautionary principle) 68

7.1.3. Protection of national treasures possessing artistic, historic or archaeological value 69

7.1.4. Protection of industrial and commercial property 69

7.2. Mandatory requirements 71

7.2.1. Protection of the environment 72

7.2.2. Consumer protection 73

7.2.3. Other mandatory requirements 73

7.3. Proportionality test 74

7.4. Burden of proof 76

8. RELATIONSHIP TO OTHER FREEDOMS AND ARTICLES OF THE TREATY RELATED TO THE FREE MOVEMENT OF GOODS 76

8.1. Fundamental freedoms 76

8.1.1. Article 45 TFEU – Freedom of movement of workers 76

8.1.2. Articles 49 and 56 TFEU – Freedom to establish and provide services 77

8.1.3. Articles 63 TFEU et seq. – Free movement of capital and payments 79

8.2. Other relevant Treaty articles 79

8.2.1. Article 18 TFEU – Non-discrimination based on nationality 79

8.2.2. Articles 28 and 30 TFEU – The customs union 80

8.2.3. Article 37 TFEU – State monopolies 80

8.2.4. Article 107 TFEU – State aids 82

8.2.5. Article 110 TFEU – Tax provisions 83

8.2.6. Article 351 TFEU 84

9. ENFORCEMENT OF ARTICLES 34 AND 35 TFEU 84

9.1. Direct effect – private enforcement 84

9.2. SOLVIT 84

9.3. Infringement proceedings under Articles 258 and 260 TFEU 85

9.3.1. Infringement procedure 85

9.3.2. Complaints 85

10. RELATED INSTRUMENTS OF SECONDARY LAW 86

10.1. Directive (EU) 2015/1535 of the European Parliament and of the Council of 9 September 2015 laying down a procedure for the provision of information in the field of technical regulations and of rules on Information Society services 86

10.2. Regulation (EU) 2019/515 – The ‘Mutual Recognition’ Regulation 87

10.3. Regulation (EC) No 2679/98 – The ‘strawberry’ Regulation 87

1. THE ROLE AND IMPORTANCE OF THE FREE MOVEMENT OF GOODS IN THE INTERNAL MARKET

The internal market is one of the EU’s greatest achievements. It is at the heart of the European project, has fuelled economic growth in the past decades, and brought concrete benefits to European consumers and businesses. A well-functioning single market becomes even more essential during sanitary crises such as the COVID-19 pandemic. It allows products to circulate freely, ensuring their availability, and reaching those that are most in need EU wide.

The integrity of the single market is also a necessary tool to fuel collective recovery for all Member States’ economies. In this regard, the internal market cannot only facilitate that EU citizens enjoy a wider choice of products, but also gives EU economic operators a large domestic market, stimulating trade and competition, and improving efficiency.

Today’s internal market makes it easy to buy and sell products across the 27 EU Member States with a total population of more than 450 million people and gives consumers a wide choice of products. At the same time, the free movement of goods is beneficial for business, as around 75 % of intra-EU trade is in goods. The single European marketplace helps EU businesses to build a strong platform in an open, diverse and competitive environment. This strength fosters growth and job creation in the EU and gives European businesses the resources they need in order to be successful in the global market. A properly functioning internal market for goods is thus a critical element for the current and future prosperity of the EU in a globalised economy (5).

From a legal perspective, the principle of the free movement of goods has been a key element in creating and developing the internal market. Articles 34 to 36 TFEU define the scope and content of the principle by prohibiting unjustified restrictions on intra-EU trade. However, they are only applicable in non-harmonised areas.

Harmonisation legislation consists of EU regulations and directives which aim at creating common rules which are applicable in all Member States. While regulations are directly applicable and binding acts which must be applied in their entirety across the EU, directives are acts which only set out a goal that all Member States must achieve. Harmonised legislation has specified the meaning of the internal market in many areas and has thereby framed the principle of the free movement of goods in concrete terms for specific products. Nevertheless, the fundamental function of the Treaty principles as a key anchor and a safety net for the internal market remains unaltered.

Today’s free movement of goods incorporates many policies and fits smoothly into a responsible internal market which guarantees an easy access to high-quality products, combined with a high degree of protection of other public interests.

2. THE TREATY PROVISIONS

The main Treaty provisions governing the free movement of goods are:

— Article 34 TFEU, which relates to intra-EU imports and prohibits ‘quantitative restrictions and all measures having equivalent effect’ between Member States; it reads ‘Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States’.

— Article 35 TFEU, which relates to exports from one Member State to another and similarly prohibits ‘quantitative restrictions and all measures having equivalent effect’. It reads; ‘Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States’.

— Article 36 TFEU, which provides for derogations to the internal market freedoms of Articles 34 and 35 TFEU that are justified on certain specific grounds. It reads: ‘The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.

The Treaty chapter on the prohibition of quantitative restrictions between Member States contains, also in Article 37 TFEU, rules on the adjustment of State monopolies of a commercial character. Its role and relation to Articles 34-36 TFEU is briefly described in Chapter 6 of this guide, which also covers other Treaty articles.

3. THE SCOPE OF ARTICLE 34 TFEU

3.1. General conditions

3.1.1. Non-harmonised area

While Articles 34-36 TFEU lay the groundwork for the principle of the free movement of goods, they are not the only legal yardstick for assessing the compatibility of national measures with internal market rules. These Treaty articles apply where a given product is not covered by EU harmonising legislation or is only partially covered by EU harmonising legislation. This would be the case should the technical specifications of a given product or its conditions of sale be subject to harmonisation by means of directives or regulations adopted by the EU. Therefore, the main rule is that where a matter has been the subject of exhaustive harmonisation at EU level, any national measure relating thereto must be assessed in the light of the provisions of that harmonising measure and not in the light of primary law (6). However, in instances of incorrect transposition of secondary legislation which aims to remove barriers to the internal market, individuals who have been harmed by such incorrect transposition may rely on Treaty provisions on free movement of goods to render their Member State liable for a breach of EU law (7).

Hence, where secondary legislation is relevant, any national measure relating thereto must be assessed in the light of the harmonising provisions (8). This is due to the fact that harmonising legislation can be understood as substantiating the free movement of goods principle by establishing actual rights and duties to be observed in the case of specific products.

This can be seen in Case C-292/12 Ragn-Sells, which concerned certain contract documents drawn up by a municipality in the course of a procedure for awarding a service concession for the collection and transport of waste produced on its territory. The Court stated that as Regulation (EC) No 1013/2006 of the European Parliament and of the Council on shipments of waste (9) aims to provide a harmonised set of procedures whereby movements of waste can be limited in order to secure protection of the environment, it was not necessary to examine whether the national measure complied with Articles 34 TFEU to 36 TFEU (10). Even after several decades of dedicated activity on the part of the EU legislator in providing a system of harmonised rules, the Treaty provisions on free movement of goods have not become redundant; their scope is still remarkable. It is not uncommon for certain areas to not be harmonised at all or only be subject to partial harmonisation. Where harmonising legislation cannot be identified or is not exhaustive, Articles 34-36 TFEU operate. In this respect, the Treaty articles act as a safety net, guaranteeing that any obstacle to trade within the internal market can be scrutinised as to its compatibility with EU law.

3.1.2. Meaning of ‘goods’

Articles 34 and 35 TFEU encompass imports and exports of goods and products of any type. Any good may be covered by the Treaty articles, provided it has economic value: ‘by goods, within the meaning of the Treaty, there must be understood products which can be valued in money and which are capable, as such, of forming the subject of commercial transactions’ (11).

The Court of Justice has clarified in its jurisprudence the proper designation of particular products. For example, works of art must be seen as goods (12). Coins which are no longer in circulation as currency would equally fall under the definition of goods, as would bank notes and bearer cheques (13); although donations in kind would not (14). Waste is to be regarded as a good, regardless of its ability to be recycled or reused (15). Electricity (16) and natural gas (17) are also considered goods, as are human blood, plasma and medicinal products derived thereof (18).

However, it is important to draw a legal distinction between goods and services as per the Treaty freedoms (19). For instance, while fish are certainly goods, fishing rights and angling permits are not necessarily covered by the free movement of goods principle. They rather constitute a ‘provision of a service’ within the meaning of the Treaty provisions relating to the freedom to provide services (20). If a State measure affects both the freedom to provide services and the free movement of goods, the Court may examine the measure in relation to both freedoms. For example, in Case C-591/17 Austria v Germany concerning an infrastructure use charge and the relief from motor vehicle tax for vehicles registered in Germany, the Court considered it in light of Article 34 TFEU and the freedom to provide services under Article 56 TFEU. It went on to also consider the case with regard to the principles of non-discrimination under Article 18 TFEU and Article 92 TFEU which prohibits any discrimination in the area of transport (21).

3.1.3. Addressees

Articles 34-36 TFEU deal with measures taken by the Member States. These provisions have been interpreted broadly to bind not only national authorities, but also all other authorities of a country, including local and regional authorities (22), as well as the judicial or administrative bodies of a Member State (23). This evidently covers measures taken by all bodies established under public law as ‘public bodies’. In addition, Articles 34-36 TFEU may apply to measures taken by non-state actors or other bodies established under private law, provided they fulfil certain sovereign functions or their activities may be attributed to the State otherwise. Indeed, measures taken by a professional body which has been granted regulatory and disciplinary powers by national legislation in relation to its profession may fall within the scope of Article 34 TFEU (24).

The same applies to activities of bodies established under private law but which are set up by law, mainly financed by the Government or compulsory contribution from undertakings in a certain sector and/or from which members are appointed by the public authorities or supervised by them and can be therefore attributed to the State (25). In Fra.bo, the Court found Article 34 TFEU to apply horizontally to a private-law certification body. Products certified by this body were considered by national authorities to be compliant with national law. And, by virtue of this competence acquired de facto, the certification body had the power to regulate the entry of products, in this case copper fittings, into the German market (26). The Court has acknowledged that public statements made by a State official, despite lacking legal force, are attributable to a Member State and may constitute an obstacle to the free movement of goods. Specifically, such instances would occur if the addressees of the statements can reasonably suppose that these are positions taken by the official with the authority of his office (27).

Although the term ‘Member State’ has been interpreted broadly, it generally does not apply to ‘purely’ private measures, or measures taken by private individuals or companies, as these are not attributable to the State. In Case C-265/95 Commission v France, however, the Court considered France’s failure to take all necessary and proportionate measures to prevent damaging actions taken by private individuals, in this case French farmers who had sabotaged imported agricultural goods, as a violation of Article 34 TFEU read together with Article 4(3) TFEU (28). Though the restriction occurred as a result of the actions of individuals, a Member State was found in violation of EU law for not taking sufficient measures to protect the free movement of these goods.

Finally, Article 34 TFEU has also been applied to measures taken by the EU institutions. With regard to judicial review the EU legislature must, however, be allowed broad discretion. As a result, the legality of a measure taken by an EU institution may only be questioned if the measure is manifestly inappropriate, in regard to the objective which the competent institution is seeking to pursue (29).

3.1.4. Active and passive measures

Often characterised as a defence right, the application of Article 34 TFEU to national measures which hamper cross-border trade necessarily presupposes activity on the part of a State. As a result, the measures falling within the scope of Article 34 TFEU consist primarily of binding provisions of Member States’ legislation. However, non-binding measures can also constitute a breach of Article 34 TFEU (30). This is the case of administrative practices that may produce an obstacle to the free movement of goods if it has a certain degree of consistency and generality (31).

Examples of administrative practises considered as measures of equivalent effect by the Court of Justice include: a systematic refusal to grant type approval for postal franking machines, which was by its nature protectionist and discriminatory (32); systematically classifying as medicinal products by function and, in the absence of marketing authorisation, withdrawing from the market products based on medicinal herbs lawfully produced or marketed as food supplements or dietary products in other Member States (33); automatically classifying vitamin preparations as ‘medicinal products’ after being lawfully manufactured or marketed as food supplements in the other Member States where they contain three times more vitamins (34); and requiring that enriched foodstuffs lawfully produced or marketed in other Member States may be marketed in Denmark only if it is shown that such enrichment with nutrients meets a need in the Danish population (35).

In view of Member States’ obligations under Article 4(3) TFEU, which requires them to take all appropriate measures to ensure fulfilment of the Treaty obligations and the ‘effet utile’ of EU law, the Court has found Article 34 TFEU to prohibit not only State action amounting to an infringement, but inaction, too. This may arise where a Member State refrains from adopting the measures required in order to deal with obstacles to the free movement of goods, and the specific obstacle may even emanate from action by private individuals. In Case C-265/95, France was held responsible for actions of national farmers seeking to restrict the import of agricultural goods from neighbouring Member States by preventing .the interception of lorries transporting these goods or destructing their loaded goods. The non-intervention of national authorities against these acts was considered an infringement of Article 34 TFEU, as Member States are obliged to ensure the free movement of products in their territory by taking the measures necessary and appropriate for the purposes of preventing any restriction due to the acts of private individuals (36).

Moreover, Article 34 TFEU may create an obligation of result. This duty is infringed if a Member State falls short of the objectives due to its inactivity or insufficient activity. In Case C-309/02, for example, the Court found in a preliminary ruling that German rules were contrary to Article 34 TFEU for failing to ensure that private parties could effectively participate in a German mandatory take-back system for one-way beverage packaging (37).

3.2. Territorial scope

The obligation to respect the provisions of Articles 34-36 TFEU applies to all Member States of the EU. In addition, Treaty provisions may apply to European territories for whose external relations a Member State is responsible and also to overseas territories dependent upon or otherwise associated with a Member State (38).

For a detailed account of the territories to which Article 34 TFEU applies, see the Annex to this guide.

With regard to EFTA countries that are contracting parties to the EEA Agreement and Turkey, the provisions of specific agreements and not those of the TFEU govern the trade in goods between these countries and the Member States. Hence, products referred to in Article 8(3) of the EEA Agreement and originating in Iceland, Liechtenstein, and Norway enjoy free movement in the EU by virtue of Article 11 of the EEA Agreement. Industrial products originating in Turkey enjoy free movement in the EU by virtue of Articles 5 to 7 of Decision No 1/95 of the EC-Turkey Association Council on implementing the final phase of the Customs Union (39).

3.3. Cross-border trade

The scope of Article 34 TFEU is limited to obstacles in trade between the Member States. A cross-border element is therefore necessary for a case to be evaluated under this provision. Purely national measures, affecting only domestic goods, fall outside the scope of Articles 34-36 TFEU. For a measure to fulfil the cross-border requirement, it is sufficient that it is capable of either indirectly or potentially hindering intra-EU trade (40).

Theoretically, the required cross-border element in the Treaty provisions does not prevent Member States from treating their domestic products less favourably than imported products (‘reverse discrimination’), though this is unlikely to occur in practice. Although Article 34 TFEU is applicable where a domestic product is re-imported, or leaves the Member State but is imported back (41), it does not apply in cases where the sole purpose of re-import is to circumvent the domestic rules (42).

The cross-border requirement may also be fulfilled if the product is merely transiting the Member State in question. In this regard, Article 36 TFEU clearly refers to restrictions on ‘goods in transit’ as being covered by the provisions of Articles 34 and 35 TFEU.

The principle of the free movement of goods applies to products originating in Member States and those from third countries in free circulation in Member States. Article 29 TFEU sets out that products coming from third countries are considered to freely circulate in a Member State provided the import formalities have been complied with and relevant customs duties levied. In Case C-30/01 Commission v United Kingdom, the Court confirmed that under Article 29(2) TFEU, measures taken for the purposes of intra-Union trade applies in the same way to products originating in Member States and those originating from third countries (43).

According to established case law, a national measure will not fall outside the scope of the prohibition in Articles 34-35 TFEU only because the hindrance which it creates is slight and because it is possible for products to be marketed in other ways (44). Even if a measure is of relatively minor economic significance, is only applicable to a very limited geographical part of the national territory (45) or only affects a limited number of imports/exports or economic operators, it may constitute a prohibited measure having equivalent effect.

However, State measures which are too uncertain and indirect to have a restrictive effect on trade between Member States can be distinguished from the above (46). In Case C-297/05, for instance, the Court considered that an administrative formality by the Netherlands involving the identification of vehicles imported into the country prior to their registration was ‘unlikely to have any deterrent effect whatsoever on the import of a vehicle into the Netherlands or to make the import of vehicles less attractive’ (47). Thus, this measure fell outside the scope of Article 34 TFEU.

3.4. Types of restrictions under Article 34 TFEU

3.4.1. Quantitative restrictions

Quantitative restrictions have been defined as measures which amount to a total or partial restraint on imports or goods in transit (48). Examples of such measures include an outright ban on imports or a quota system (49). In other words, quantitative restrictions apply when certain import or export ceilings have been reached. However, only non-tariff quotas are caught by Article 34 TFEU, since tariff quotas are covered by Article 30 TFEU, which prohibits customs duties on imports and exports and charges having equivalent effect.

A quantitative restriction may be based on statutory provisions or merely on an administrative practice. Thus, even a covert or hidden quota system will be caught by Article 34 TFEU.

3.4.2. Measures of equivalent effect

The term ‘measure having equivalent effect’ is much broader in scope than a quantitative restriction. While it is not easy to draw an exact dividing line between quantitative restrictions and measures of equivalent effect, this is not of much practical importance given that the rules generally apply in the same way to quantitative restrictions as to measures of equivalent effect.

In Dassonville, the Court of Justice set out an interpretation on the meaning and scope of measures of equivalent effect (50):

‘All trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be considered as measures having an effect equivalent to quantitative restrictions.’

This definition has been confirmed in subsequent case law with minor variations. The term ‘trading rules’ does usually not appear nowadays, as the Dassonville formula is actually not limited to trading rules but also embraces, for instance, technical regulations and even non-binding acts.

In the Dassonville case, the Court stressed that the most important element determining whether a national measure is caught under Article 34 TFEU is its effect (…capable of hindering, directly or indirectly, actually or potentially…) (51). In consequence, there is no need for a discriminatory element in order for a national measure to be caught under Article 34 TFEU.

The landmark ruling by the Court in Cassis de Dijon (52) affirmed this approach. By acknowledging that the differences between the national rules of the Member States could inhibit trade in goods, the Court confirmed that Article 34 TFEU could also catch national measures which apply equally to domestic and imported goods. In this case, Member States could derogate by having recourse not only to Article 36 TFEU but also to the mandatory requirements, a concept which was first enshrined in this ruling.

In summary, Article 34 TFEU applies to national measures which discriminate against imported goods (so-called distinctly applicable measures) and to national measures which in law seem to apply equally to both domestic and imported goods, but in fact impose an additional burden on imports (so-called indistinctly applicable measures). (53) This burden stems from the fact that the imported goods are required to comply with two sets of rules – those laid down by the Member State of manufacture, and those laid down in the Member State of importation.

Subsequently, measures of equivalent effect to a quantitative restriction have also come to include any other measures capable of hindering market access (54). In this regard, the Court has stated the following in Commission v Spain (55): ‘it is clear from the case law that a measure, even if it does not have the purpose or effect of treating less favourably products from other Member States, is included in the concept of a measure equivalent to a quantitative restriction within the meaning of Article 34 TFEU if it hinders access to the market of a Member State of goods originating in other Member States.’

The assumption underlining the so-called market access test is that conditions of access are somehow more difficult for imported products. Often, the Court puts emphasis on assessing whether the measure concerned may have a considerable influence on the behaviour of consumers by making it less attractive to purchase an imported product (56).

Hence, the definition of measures of equivalent effect is wide and constantly evolving. For instance, the Court held in Case C-591/17 Austria v Germany that an infrastructure use charge and the relief from motor vehicle tax for vehicles registered in Germany was liable to restrict the access to the German market of goods from other Member States and thus constituted a restriction to the free movement of goods. It pointed out that even though the infrastructure use charge was not levied on goods carried as such, it was nonetheless capable of affecting goods that are delivered using passenger vehicles weighing up to 3,5 tonnes registered in a Member State other than Germany (57).

Another example of the dynamic nature of the concept of a measure of equivalent effect is Case C-573/12 Ålands Vindkraft, which concerned a national support scheme for green electricity. Certificates under the scheme were only awarded to Swedish renewables producers, even if the electricity they supplied or used may have included imported electricity. The Court held that such a scheme may hinder at least indirectly and potentially imports of (green) electricity from other Member States. The Court pointed out that failure by a Member State to adopt adequate measures to prevent barriers to the free movement of goods that have been created is just as likely to obstruct intra-EU trade as is a positive act. Hence, the Court held that the legislation at issue constituted a measure having equivalent effect to a quantitative restriction on imports (58).

3.4.2.1. Restrictions on use

One category of restrictions has been developed in the Court’s case law rather recently: restrictions on use. Such restrictions are characterised as national rules which allow the sale of a product while restricting its use to a certain extent. Restrictions on use may include restrictions relating to the purpose or the method of the particular use, the context or time of use, the extent of the use or the types of use. Such measures may in certain circumstances constitute measures having equivalent effect to a quantitative restriction.

There are three cases which could be named in this connection. First, Commission v Portugal (59), which concerned a Portuguese law prohibiting the affixing of tinted films to the windows of motor vehicles. The Commission argued that any potential customers, traders or individuals would not buy such film since they knew that they could not affix it to the window of motor vehicles (60). The Court seemed to accept this argument and held that ‘…potential customers, traders or individuals have practically no interest in buying them in the knowledge that affixing such film to the windscreen and windows alongside passenger seats in motor vehicles is prohibited’ (61). As a result, it reached the conclusion that Portugal was in breach of its obligations under Article 34 TFEU.

Secondly, in Commission v Italy (62), the question was whether Italy, by maintaining rules which prohibit motorcycles from towing trailers, had failed to fulfil its obligations under Article 34 TFEU. In so far as trailers which were specifically designed to be towed by motorcycles were concerned, the Court held that the possibility for their use other than with motorcycles was limited, and that consumers, knowing that they were not allowed to use their motorcycle with a trailer specifically designed for it, had practically no interest in buying such a trailer (63). As a result, the prohibition in question constituted a breach of Article 34 TFEU.

Finally, Mickelsson and Roos (64) concerned a reference for a preliminary ruling which raised the question of whether Articles 34 and 36 TFEU precluded Swedish rules on the use of personal watercraft. Under Swedish regulations, the use of such crafts on waterways not deemed to be general navigable waterways and on waters on which the county administrative board had not permitted the use thereof was prohibited and punishable by a fine. The Court stated that where such rules have the effect of preventing users of personal watercraft from using them for the specific and inherent purposes for which they were intended or of greatly restricting their use, they have the effect of hindering the access to the domestic market for those goods. As the actual possibilities for the use of personal watercraft in Sweden were merely marginal, the national rules constituted measures of equivalent effect to quantitative restrictions (65). However, the Court held that the national rules could be justified on grounds of protection of the environment if certain additional requirements were complied with (66). In Sandström, the Court further specified the conditions on which a prohibition to use a personal watercraft on waters other than designated waterways may be allowed (67).

As seen above, the assessment of restrictions on use is also governed by the market-access test. In addition to assessing the market effects of the measure, the Court also assesses the effects it may have on consumer behaviour. It may be summarised that measures which impose a total ban on the use of a specific product, which prevent its use for the specific and inherent purposes for which it was intended, or which greatly restrict its use, may fall within the scope of Article 34 TFEU.

3.4.2.2. Discriminatory selling arrangements

Almost twenty years after Dassonville, the Court found it necessary to revise its jurisprudence on the scope of ‘measures having equivalent effect’ under Article 34 TFEU. Thus, the Court created the concept of selling arrangements in the landmark Keck and Mithouard judgment, which concerned French legislation prohibiting resale at a loss (68). It stated that ‘the application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements is not such as to hinder directly or indirectly, actually or potentially, trade between Member States within the meaning of the Dassonville judgment, so long as:

1. Those provisions apply to all relevant traders operating within the national territory, and;

2. They affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States.’ (69)

Rules that lay down requirements to be met by goods continue to be treated under Cassis de Dijon and are therefore considered to fall per se within the scope of Article 34 TFEU. By contrast, selling arrangements fall within the scope of Article 34 TFEU only under the condition that the party invoking a violation can prove that they introduce discrimination on the basis of the origin of products, either in law or in fact.

In Case C-591/17 Republic of Austria, the Court described selling arrangements as national rules that concern the ‘arrangements under which products may be sold’ (70). Accordingly, selling arrangements include measures relating to the conditions and methods of marketing (see Section 4.6), (71) the time of the sale of goods (72), the place of the sale of goods or to restrictions regarding by whom goods may be sold (73), as well as in some cases measures which relate to product pricing (see Section 4.4) (74). It is relatively easier to comprehend what types of measures are concerned with the characteristics of the products than what types of measures constitute selling arrangements. Measures which concern the characteristics of a product could be, for example, measures regarding its shape, size, weight, composition, presentation or identification (see Section 4.7).

As an example of the above: the Court held in Alfa Vita (75) that national legislation, which made the sale of ‘bake-off’ products subject to the same requirements as those applicable to the full manufacturing and marketing procedure for traditional bread and bakery products was in breach of Article 34 TFEU and could not be regarded as a selling arrangement. The Court reached this conclusion on the basis that requiring vendors of ‘bake-off’ products to comply with all of the requirements imposed on traditional bakeries did not take the specific nature of those products into account and entailed additional costs, thereby making the marketing of those products more difficult (76).

Certain procedures or obligations which do not relate to the product or its packaging may be considered as selling arrangements as shown in Sapod Audic and Eco-Emballages (77). The national measure at issue provided that any producer or importer was required to contribute to or organise the disposal of all of their packaging waste. The Court pointed out that the measure only imposed ‘a general obligation to identify the packaging collected for disposal by an approved undertaking’ (78). Hence, the Court held that the ‘obligation imposed by that provision did not relate as such to the product or its packaging and therefore did not, of itself, constitute a rule laying down requirements to be met by goods, such as requirements concerning their labelling or packaging’ (79). As a result, it could be regarded as a selling arrangement.

To recapitulate, selling arrangements are measures which are associated with the marketing of the good rather than with the characteristics of the good (80), and which fall outside the scope of Article 34 TFEU in case they meet the two cumulative conditions established in the Keck judgment explained above.

3.5. The Mutual Recognition principle

Technical obstacles to the free movement of goods may occur when national authorities apply national rules that lay down requirements to be met by goods lawfully marketed in other Member States. Goods ‘lawfully marketed in another Member State’ are those goods or goods of that type which comply with the relevant rules applicable in that Member State or are not subject to any such rules in that Member State, and are made available to end users in that Member State. If national rules do not implement secondary EU legislation, they constitute technical obstacles to which Articles 34 and 36 TFEU apply, even if those rules apply without distinction to all products.

The mutual recognition principle was established in the case law of the Court. In the Cassis de Dijon judgment (81), the Court established that in the absence of harmonisation, national rules that lay down requirements (such as those relating to designation, form, size, weight, composition, presentation, labelling, packaging) to be met by goods coming from other Member States where they are lawfully manufactured and marketed, represent obstacles to free movement of goods and constitute measures of equivalent effect prohibited by Article 34 TFEU.

According to the mutual recognition principle, if a business is lawfully selling a product in one Member State, in compliance with the applicable national technical rules of that Member State, it should be able to sell it in other Member States without having to adapt it to the national rules of the importing Member State.

Hence, in principle, Member States of destination cannot restrict or deny the placing on the market of goods which are not subject to EU harmonisation and which are lawfully marketed in another Member State, even if they were manufactured according to technical and quality rules different from those that must be met by domestic products. The same applies if there are no technical rules applicable to that product in the Member State of origin.

However, the principle is not absolute: a restriction may be justified by an objective of public interest.

Consequently, mutual recognition should not be viewed as entailing lower health, environment or safety standards, or as limiting the market surveillance capabilities of national authorities, but rather as striking a careful balance between the free movement of goods and the objectives of public interest. Member States must adhere to the principle only if the legitimate public interests covered by their applicable national technical rule are adequately protected.

Exceptions to the free movement of goods are to be interpreted narrowly (82). Barriers are justified only if the national measures are necessary to satisfy mandatory requirements or any of the interests listed in Article 36 TFEU and are proportionate to the legitimate objective pursued. This is summarised well in a recent judgment of the Court, which relates to refusing to recognise certain hallmarks, as follows:

‘Obstacles to the free movement of goods resulting, in the absence of harmonisation of national legislations, from the application by a Member State to goods coming from other Member States, in which they are lawfully manufactured and marketed, of rules relating to conditions with which those goods must comply, even if those rules apply without distinction to all products, therefore constitute measures having equivalent effect prohibited by Article 34 TFEU, unless their application can be justified by an objective of public interest capable of taking precedence over the free movement of goods.’ (83)

In the same case, the Court also noted that the principle of mutual recognition cannot apply to trade within the EU in goods originating in third countries and in free circulation where they have not, before being exported to a Member State other than that in which they are in free circulation, been lawfully marketed in the territory of a Member State (84).

Thus, in summary, exceptions from the mutual recognition principle that applies in the non-harmonised area are possible:

(1) The general rule is that products lawfully marketed in another Member State enjoy the right to free movement, and

(2) The general rule does not apply if the Member State of destination can prove that it is essential to impose its own technical rules on the products concerned based on the reasons outlined in Article 36 TFEU or in the mandatory requirements developed in the Court’s jurisprudence, subject to the compliance with the principle of proportionality.

A new Regulation (EU) 2019/515 of the European Parliament and of the Council on the mutual recognition of goods lawfully marketed in another Member State (85) applies as of 19 April 2020. It replaces Regulation (EC) No 764/2008 of the European Parliament and of the Council laying down procedures relating to the application of certain national technical rules to products lawfully marketed in another Member State (86).

4. TYPES OF MEASURES

Measures of equivalent effect under Article 34 TFEU take a variety of different forms and shapes. Sometimes they are very blunt measures specifically targeting imports or allowing preferential treatment of domestic goods, and sometimes they are an unexpected side effect of general policy decisions. In past decades, certain types of measures have emerged repeatedly in the jurisprudence and practical application of Articles 34-36 TFEU in infringement procedures. A number of them are described below.

4.1. National provisions related to the act of import (import licences, inspections and controls)

National measures which relate directly to the act of import of products from other Member States can make imports more cumbersome and are therefore regularly considered as measures having equivalent effect to quantitative restrictions contrary to Article 34 TFEU. The obligation to obtain an import licence before importing goods is a clear example in this respect. Because formal processes of this kind can cause delays, even where licences are granted automatically and the Member State concerned does not purport to reserve the right to withhold a licence, such an obligation may infringe Article 34 TFEU (87).

Inspections and controls, such as veterinary, sanitary, phytosanitary and other controls, including customs checks on imports (and exports), are considered to be measures having equivalent effect within the meaning of Articles 34 and 35 respectively (88). Such inspections are likely to make imports or exports more difficult or costly, as a result of the delays inherent in the inspection procedure and the additional transport costs which a trader may thereby incur.

The establishment of the internal market on 1 January 1993 essentially eliminated recurrent border controls for the transfer of goods. Since then, Member States may not carry out controls at their borders unless they are part of a general control system taking place to a similar extent inside the national territory and/or unless they are performed as spot-checks. Irrespective of where such controls take place, however, if they amount to a systematic inspection of imported products, they are still considered as measures of equivalent effect (89). They may only exceptionally be justified, if strict conditions are fulfilled (90).

4.2. Obligations to appoint a representative or to provide storage facilities in the importing Member State

The obligation for an importer to have a place of business in the Member State of destination of goods was found by the Court to directly contravene the Articles on the free movement of goods within the internal market. The Court held that by compelling undertakings established in other Member States to incur the cost of establishing a representative in the Member State of import, this obligation makes it difficult, if not impossible, for certain undertakings, in particular small or medium-sized businesses, to enter that Member State’s market (91). An obligation to appoint a representative or agent or set up a secondary establishment, office or storage facility in the importing Member State is generally also contrary to Article 34 TFEU.

Some Member States have tried to justify such requirements by arguing that they are necessary to ensure the proper enforcement of national provisions in the public interest, including criminal liability in some cases. The Court has rejected this argument. It held that although each Member State is entitled to take appropriate measures within its territory in order to ensure the protection of public policy, such measures are only justified if certain conditions are met. It must be established that such measures are necessary in order to meet legitimate reasons of general interest and that this cannot be achieved by means which place less of a restriction on the free movement of goods (92). The Court has held that ‘[e]ven though criminal penalties may have a deterrent effect as regards the conduct which they sanction, that effect is not guaranteed and, in any event, is not strengthened…solely by the presence on national territory of a person who may legally represent the manufacturer’ (93). Thus, from the point of view of public interest objectives, the requirement that a representative be established on national territory does not provide sufficient additional safeguards to justify an exception to the prohibition contained in Article 34 TFEU.

National requirements regulating the stocking or storage of imported goods may also amount to a violation of Article 34 TFEU if these measures affect imported goods in a discriminatory manner compared to domestic products. This would include any rules which prohibit, limit or require stocking of imported goods only. A national measure requiring imported wine-based spirits to be stored for at least six months in order to qualify for certain quality designations was held by the Court to constitute a measure having equivalent effect to a quantitative restriction (94).

Similar obstacles to trade in goods may be created by any national rules which totally or partially restrict the use of stocking facilities to domestic products only, or make the stocking of imported products subject to conditions which are different from those required for domestic products and are more difficult to satisfy. Consequently, a national measure encouraging the stocking of domestically produced products could create obstacles to the free movement of goods under Article 34 TFEU.

4.3. National bans on specific products/substances

A ban on the marketing of a specific product or substance is the most restrictive measure a Member State can adopt from the perspective of the free movement of goods. The majority of goods targeted by national bans are foodstuffs, such as vitamins and other food supplements (95) and chemical substances (96).

The justifications most often invoked by Member States for these stringent measures are the protection of health and life of humans, animals and plants within Article 36 TFEU, and the mandatory requirements developed in the Court’s jurisprudence, such as the protection of the environment. These justificatory grounds are often combined. A Member State imposing a national ban on a product/substance must show that the measure is necessary and, where appropriate, that the marketing of the products in question poses a serious risk to, for example, public health and that those rules are in conformity with the principle of proportionality (97). This includes providing all relevant evidence, such as technical, scientific, statistical or nutritional data (98). In Humanplasma, whilst the objective of the restriction was to ensure the quality and safety of blood and blood components, and thus public health, this measure was considered to go beyond what was necessary (99).

Moreover, a Member State bears the burden of proving that the stated aim cannot be achieved by any other means having a less restrictive effect on intra-EU trade (100). For example, in relation to a French ban on the addition to beverages of caffeine above a certain limit, the Court held that ‘appropriate labelling, informing consumers about the nature, the ingredients and the characteristics of fortified products, can enable consumers who risk excessive consumption of a nutrient added to those products to decide for themselves whether to use them’ (101). Hence, the Court found that the ban on the addition of caffeine above a certain limit was not the least restrictive measure available and therefore not necessary in order to achieve the aim of consumer protection.

The Danish Vitamins case (102) concerned the Danish administrative practice of prohibiting the enrichment of foodstuffs with vitamins and minerals if it could not be shown that such enrichment met a need of Denmark’s population. The Court initially agreed that it was for Denmark itself to decide on its intended level of protection of human health and life, bearing in mind the applicability of the principle of proportionality. The Court remarked, however, that Denmark’s authorities had the burden of proof ‘to show in each case, in the light of national nutritional habits and in the light of the results of international scientific research, that their rules are necessary to give effective protection to the interests referred to’ and ‘that the marketing of the products in question poses a real risk to public health’ (103). Ultimately, the Court concluded that the measure was not justifiable on the basis of a ‘real risk to public health’, which would have required a detailed assessment on a case-by-case basis of the effects of adding minerals and vitamins to foodstuffs (104).

In general, the Court has taken a restrictive approach to measures of this kind. However, in areas where there is a lack of scientific certainty on the impact of a specific product or substance on public health or the environment, for example, it has proven more difficult for the Court to reject such bans (105). In these cases, the so-called precautionary principle also plays an important role in the Court’s overall assessment of the case (106).

Situations may also arise in cases concerning the protection of public health where Member States do not ban the addition of a product or substance authorised in another Member State outright, but simply require a prior authorisation for its addition. In these instances, Member States will only comply with their obligations under EU law if such procedures are accessible and can be completed within a reasonable time-frame and if the banning of a product can be challenged before national courts. This procedure must be expressly provided for in a measure of general application which is binding on the national authorities of the Member State. The characteristics of this ‘simplified procedure’ were established by the Court in Case C-344/90 (107).

4.4. Price measures

Although the Treaty does not contain specific provisions with regard to national regulations on price controls, the Court has on several occasions applied Article 34 TFEU to national price control regulations.

Such regulations cover a number of measures: minimum and maximum prices, price freezes, minimum and maximum profit margins and resale price maintenance.

Minimum prices: A minimum price fixed at a specific amount, although applicable without distinction to domestic and imported products, can restrict imports by preventing their lower cost price from being reflected in the retail selling price. This impedes importers from using their competitive advantage and thus is a measure having equivalent effect within Article 34 TFEU, as the consumer cannot take advantage of this price (108). Minimum prices may however be regulated at EU level, as for example, with national legislation setting minimum prices for tobacco, which should be considered in the light of Council Directive 2011/64/EU of 21 June 2011 on the structure and rates of excise duty applied to manufactured tobacco (109).

In Case C-221/15 Colruyt, which concerned the pricing of tobacco products in Belgium, the Court held that national legislation prohibiting retailers from selling tobacco products at a unit price lower than the price indicated by the manufacturer or importer affixed on the product, in so far as that price was freely determined by the latter, is not precluded under Article 34 TFEU (110). Here, the Court found minimum tobacco product pricing to constitute a certain selling arrangement which applies to all relevant traders operating within the national territory and which does not impede access to the Belgian market of tobacco products from another Member State any more than it impedes the access of domestic tobacco products.

In Scottish Whiskey Association, the Court considered whether the Scottish government had breached Article 34 TFEU by imposing minimum prices per unit of alcohol. The measures were intended to eliminate very low-priced alcohol from the market and sought to be justified for reasons of public health. The Court found that the fact that the national legislation ‘prevented the lower cost price of imported products being reflected in the selling price to the consumer’ constituted a measure having equivalent effect (111).

Maximum prices: Prior to Keck, the Court held that although a maximum price which is applicable without distinction to domestic products and imported products does not in itself constitute a measure having equivalent effect to a quantitative restriction, it may have such an effect if it is fixed at a level which makes the sale of the imported product either impossible or more difficult than that of its domestic counterpart. It may remove any competitive advantage of imported goods and/or, if the maximum price is set too low, it may not take into account the costs of transport borne by an importer (112).

Price freezes: Similarly, prior to the Keck ruling (see Section 3.4.2.2), the Court considered in its early jurisprudence that price freezes which are applicable equally to national products and to imported products do not per se amount to a measure having an equivalent effect to a quantitative restriction. However, they may produce such an effect de facto if prices are fixed at such a level that the marketing of imported products becomes either impossible or more difficult than the marketing of domestic products (113). This will be the case if importers can market imported products only at a loss.

Minimum and maximum profit margins: These are margins which are set at a specific amount rather than as a percentage of the cost price. According to the EU Court’s case law prior to Keck, these would not necessarily constitute a measure of equivalent effect within the meaning of Article 34 TFEU. The same would apply to a fixed retail profit margin, which is a proportion of the retail price freely determined by the manufacturer, at least when it constitutes adequate remuneration for the retailer. However, a maximum profit margin which is fixed at a single amount applicable both to domestic products and imports but which fails to make allowance for the cost of importation is caught by Article 34 TFEU (114).

Since Keck, it appears that the Court has often considered national price control regulations to come within the concept of ‘selling arrangements’ (115). In this respect, they may fall outside the scope of Article 34 TFEU if certain conditions are met. The fact that ‘price controls’ may constitute ‘selling arrangements’ is confirmed in the Belgapom case, where the Belgian legislation prohibiting sales at a loss and sales yielding only a very low profit margin was held to fall outside the scope of Article 34 TFEU (116).

In the more recent LIBRO case, however, the Court initially classified a rule prohibiting importers of German-language books from fixing a price lower than the retail price fixed/recommended by the publisher as a certain selling arrangement as defined in Keck. However, it concluded that the rule was in fact a measure having equivalent effect, in so far as it created a distinct regulation which treated products from other Member States less favourably (117).

In Deutsche Parkinson Vereinigung, the Court applied the market access approach in its examination of a price-fixing system for the sale of prescription-only medicinal products for human use by pharmacies, without directly referring to Keck in its judgment. After comparing the impact of price fixing on pharmacies established in Germany and in other Member States, it ultimately found this system to be a measure having equivalent effect to a quantitative restriction on imports (118). Mail-order pharmacies were found to have a limited ability to compete with traditional pharmacies in terms of services, and therefore primarily competed on the basis of prices, and as a result, were more affected by price fixing. In its assessment, the Court referred to the DocMorris case, concerning German legislation prohibiting the sale of medicinal products outside of pharmacies and thus online, which applied Keck in its reasoning (119).

As outlined above, in Scottish Whiskey Association, the Court concluded that minimum pricing constituted a measure having equivalent effect on the basis of the market access test, without referring to Keck expressly. It reasoned that ‘the fact that the legislation at issue… prevents the lower cost price of imported products being reflected in the selling price to the consumer means, by itself, that that legislation is capable of hinder the access’ (120).

4.5. Authorisation procedures

National systems which subject the marketing of goods to prior authorisation restrict access to the market of the importing Member State and are therefore regarded as creating a measure having an effect equivalent to a quantitative restriction within the meaning of Article 34 TFEU (121). The Court of Justice has set a number of conditions under which such prior authorisation might be justified (122):

— It must be based on objective, non-discriminatory criteria which are known in advance to the undertakings concerned, in such a way as to circumscribe the exercise of the national authorities’ discretion, so that it is not used arbitrarily,

— It should not essentially duplicate controls which have already been carried out in the context of other procedures, either in the same or another Member State,

— A prior authorisation procedure will only be necessary where subsequent control must be regarded as being too late to be genuinely effective and enable it to achieve the aim pursued,

— The procedure should not, on account of its duration or the disproportionate costs it entails, be such as to deter the operators concerned from pursuing their business plan,

— The procedure may not require technical analyses where these have already been carried out in another Member State and those results are available (123).

4.5.1. Type approval

Type approval requirements predefine the regulatory, technical and safety conditions a product must fulfil. Accordingly, type approval is not confined to a particular industry, as such requirements exist for products as diverse as marine equipment, mobile phones, passenger cars and medical equipment.

Generally, type approval is required before a product may be placed on the market. Compliance with type-approval requirements is often denoted by a marking on the product. The CE marking, for example, confirms compliance with such requirements by means of either a manufacturer’s self-declaration or third-party certification.

Whilst common EU-wide type-approval requirements normally facilitate the marketing of products in the internal market, national type approval in non-harmonised areas may create barriers to trade of goods. In addition, diverging national product standards make it difficult for manufacturers to market the same product in different Member States and may well lead to higher compliance costs. Obligations requiring national type approval prior to the placing of products on the market are therefore to be seen as measures having equivalent effect (124).

On the basis of health or safety justifications, a Member State may be entitled to require a product which has already received approval in another Member State to undergo a fresh procedure of examination and approval. However, in such cases the importing Member State must take account of tests or controls carried out in the exporting Member State(s) which provide equivalent guarantees or protection (125).

In Commission v Portugal (126) an undertaking was refused the required authorisation by the supervising body for the installation of imported polyethylene pipes, on the grounds that such pipes had not been approved by the national testing body. The certificates of the undertaking which were not recognised had been issued by an Italian testing institute. The Court held that authorities, in this case those of Portugal, are required to take account of certificates issued by the certification bodies of another Member State, especially if those bodies are authorised by the Member State for this purpose. In so far as the Portuguese authorities did not have sufficient information to verify the certificates in question, they could have obtained that material from the authorities of the exporting Member State. A pro-active approach on the part of the national body to which an application is made for approval or recognition of a product is required.

4.5.2. Car registration

Generally, there are three different steps in the process of obtaining a registration for a motor vehicle, according to EU legislation. First, the technical characteristics of the motor vehicle must be approved, in most cases by the EC type-approval. Some types of motor vehicles, however, are still subject to national approval procedures. Second, roadworthiness testing of used vehicles is conducted, the objective of which is to verify that the specific motor vehicle is in a good state of repair at the time of registration. Finally, the motor vehicle is registered, which authorises its entry into service in road traffic, identifies the motor vehicle concerned and issues a registration number to it.

The Court has also dealt with the refusal to register a vehicle which has its steering equipment, including the position of the steering-wheel, on the right-hand side. It held in Cases C-61/12 and C-639/11 that such a legislation constitutes a measure having equivalent effect to quantitative restrictions on imports, as far as its effect is to hinder access to the market for vehicles with steering equipment on the right, which are lawfully constructed and registered in another Member State. The Court stated that such a requirement was not necessary to achieve the objective of road safety (127).

4.6. Advertising restrictions

The role of advertising is primordial in entering the market, especially for products lawfully marketed in another Member State. The important role of advertising in enabling a product from one Member State to penetrate a new market in another Member State has been recognised by Advocates General (128) and the Court of Justice (129). The aim and effect of advertising is to, among others, persuade consumers to switch brands or buy new products.

Before Keck (see Section 3.4.2.2), the Court often held that national measures imposing advertising restrictions were covered by Article 34 TFEU. One such case was Oosthoek, concerning a ban on offering or giving free gifts for sales promotion purposes. The Court held that ‘legislation which restricts or prohibits certain forms of advertising and certain means of sales promotion may, although it does not directly affect imports, be such as to restrict their volume because it affects marketing opportunities for the imported products.’ (130) Since Keck, however, the Court has in some respects appeared to adopt a different approach (treating advertising restrictions as selling arrangements). Regardless, measures relating to advertising which appear to fall into the category of selling arrangements are treated as rules relating to products where it appears that they affect the conditions which the goods must meet (131).

Hence, the usual approach followed by the Court today seems to be that restrictions on advertising and promotion are to be considered as selling arrangements and, if non-discriminatory, falling outside the scope of Article 34 TFEU (132) . However, if the measure concerned is discriminatory, it is caught under Article 34 TFEU. National advertising restrictions which render the sale of goods from other Member States more difficult than the sale of domestic goods may therefore constitute a measure of equivalent effect to a quantitative restriction. The Court has held for example that an ‘absolute prohibition of advertising the characteristics of a product’ (133) could impede market access of products from other Member States more than it impedes access by domestic products, with which the consumers are more familiar (134).

As seen above, the Court seems to link the scope of the restriction with discrimination. In other words, if the restriction is total, it is presumed that it could have a greater impact on imported products (135) and, if partial, that it could be affecting domestic and imported products in the same way (136). However, it should be stressed that the Court in Dior (137) and Gourmet (138) indicated that some advertising bans might not necessarily affect imports more strongly than national goods.

The Court has also underlined that restrictions on internet advertising do not affect the sale of national goods, in this case, national medicinal products, in the same way as it affects the sale of medicinal products originating in other Member States (Case C-322/01 Deutscher Apothekerverband). Therefore, restrictions on internet advertising may represent an obstacle covered by Article 34 TFEU.

4.7. Technical regulations containing requirements as to the presentation of goods (weight, composition, presentation, labelling, form, size, packaging)

Requirements to be met by imported products in regard to shape, size, weight composition, presentation, identification or putting up may force manufacturers and importers to adapt the products in question to the rules in force in the Member State in which they are marketed, for example by altering the labelling of imported products (139). In its judgment in Case 27/80 Fietje (140) the Court of Justice held that the extension by a Member State of a provision which prohibits the sale of certain alcoholic beverages under a description other than that prescribed by national law to beverages imported from other Member States, thereby making it necessary to alter the label under which the imported beverage is lawfully marketed in the exporting Member state, is to be considered a measure having an effect equivalent to a quantitative restriction, which is prohibited by Article 34 TFEU.

Given that requirements as to the presentation of goods are directly interlinked with the product itself, they are not considered to be selling arrangements. Rather, these are considered measures having equivalent effect within Article 34 TFEU (141).

The following measures, for example, have been deemed contrary to Article 34 TFEU:

— A strict requirement for non-harmonised construction products to be affixed with a CE mark (142),

— A requirement for margarine to be sold in cubic packaging to distinguish it from butter (143),

— A prohibition by a Member State on marketing of articles made from precious metals without the requisite (official national) hallmarks (144),

— A prohibition on marketing of videos and DVDs sold through mail orders and online sales which do not bear an age-limit label corresponding to a classification decision from a higher regional authority or a national self-regulation body (145).

4.8. Indications of origin, quality marks, incitement to buy national products

National rules requiring the indication of the origin of the product on the product or its labelling constitute a measure of equivalent effect contrary to Article 34 TFEU.

The Court has ruled that national rules on the mandatory indication of origin may encourage consumers to buy national products to the detriment of equivalent products originating in other Member States (146). Such rules, according to the Court, have the effect of making the marketing in a Member State of similar goods produced in other Member States more difficult, and slow down economic interpenetration in the European Union by handicapping the sale of goods produced as the result of a division of labour between Member States (147). The Court has also pointed that it could be in the economic operator’s interest to indicate himself the origin of his products, without being compelled to do so. In this case, consumers can be protected against false or misleading indications of origin that could arise by relying on existing rules prohibiting such behaviour (148).

The Court has likewise held that quality schemes laid down in national law and related to the origin of the product may have a similar effect. Even if such a particular quality scheme is voluntary, it does not cease to be a measure of equivalent effect, if the use of that designation promotes or is likely to promote the marketing of the product concerned as compared with products which do not benefit from its use (149).

The Court has held that Member States are empowered to lay down quality schemes for agricultural products marketed on their territory and may make the use of designations of quality subject to compliance with such schemes. However, such schemes and designations may not be linked to a requirement that the production process for the products in question be carried on within the country but should be dependent solely on the existence of the intrinsic objective characteristics which give the products the quality required by law (150). Such scheme must therefore be accessible to any producer in the Union or any other potential Union operator whose products meet the requirements. Any requirement that impedes the accessibility to this scheme for products from other Member States should be avoided as it is liable to facilitate the marketing of products of domestic origin to the detriment of imported products (151).

The Court accepted quality schemes laid down in national law when these allow for the importation of products from other Member States under the designations they bear, even if they are similar, comparable or identical to the designations provided for in the national legislation (152).

A promotional campaign run by Member States’ authorities and involving quality or/and origin labelling equally constitute a measure of equivalent effect under Article 34 TFEU. The most famous case of such an incitement to buy national products was the Buy Irish case (153) , which involved a large-scale campaign encouraging the purchase of national goods. The Court has also held that a scheme set up by authorities in order to promote the distribution of some products made in a certain country or region, may likewise encourage consumers to buy such products to the exclusion of imported products (154).

4.9. Restrictions on distance selling (internet sales, mail order, etc.)

With the advancement of information and communication technologies, goods are increasingly traded within the internal market via the internet. Thus, the number of cases linked to internet transactions involving the transfer of goods from one Member State to another put forward in front of the Court of Justice has increased.

The questions referred to the Court in DocMorris (155) arose in national proceedings concerning internet sales of medicinal products for human use in a Member State other than that in which DocMorris was established. German law at the time prohibited the sale by mail order of medicinal products which may only be sold in pharmacies.

The first question referred by the national court was whether there is a breach of Article 34 TFEU in the event that authorised medicinal products, the sale of which is restricted to pharmacies in the Member State concerned, may not be imported commercially by mail order through pharmacies approved in other Member States in response to an individual order over the internet.

The Court started by treating this national restriction as a selling arrangement, which may be in breach of Article 34 if it is discriminatory. First, along the lines of De Agostini (re: the importance of advertisement to the sale of the product in question) (156), the Court emphasised the importance of the internet to the sale of a product. Then it explained how such an outright ban is more of an obstacle to pharmacies outside Germany than those within it. Hence the measure was in breach of Article 34 TFEU.

More specifically, the Court held that for pharmacies not established in Germany, the internet provides a more significant way to gain ‘direct access’ to the German market (157). The Court explained that a prohibition which has a greater impact on pharmacies established outside Germany could impede access to the market for products from other Member States more than it impedes access for domestic products.

In Ker-Optika (158), which concerned national legislation authorising the sale of contact lenses solely in medical supply shops, the Court confirmed that by prohibiting its sales online, the national measure breached Directive 2000/31/EC of the European Parliament and of the Council (159) and Articles 34-36 TFEU for the prohibition of the subsequent delivery of the contact lenses to customers.

A more recent Visnapuu judgment related to the Finnish Alcohol Act, under which a seller established in another Member State must hold a retail sale licence in order to import alcoholic beverages with a view to sell these beverages at retail to consumers residing in Finland. The Court held that the requirement to hold a retail sale licence in order to import alcoholic beverages prevents traders established in other Member States from freely importing alcoholic beverages into Finland, and thus constitutes a measure having equivalent effect to a quantitative restriction on imports within the meaning of Article 34 TFEU. However, it also held that Articles 34 TFEU and 36 TFEU do not preclude such legislation, provided that it is appropriate for securing the attainment of the objective of protection of health and public policy (160).

4.10. Deposit obligations

Deposit and return systems, especially in the beverages sector, have given rise to discussions in the light of environmental legislation and internal market rules in the past decades. For operators engaged in several Member States, such systems often make it difficult to sell the same product in the same packaging in different Member States. Instead, producers and importers are required to adapt the packaging to the needs of each individual Member State, which usually leads to additional costs. The effect of such systems, i.e. the partition of markets, often runs counter to the idea of a truly internal market. Therefore, national requirements in this sense may be considered as a barrier to trade under Article 34 TFEU. Regardless, deposit schemes may be justified by reasons relating to protection of the environment.

In two judgments concerning the German mandatory deposit system for non-reusable beverage packaging in the early 2000s, the Court confirmed that as EU law stands, Member States are entitled to choose between a deposit-and-return system, a global packaging-collection system or a combination of the two systems (161).

Today, deposit schemes are partly covered by harmonisation legislation, i.e. European Parliament and of the Council Directive 94/62/EC of 20 December 1994 on packaging and packaging waste (162). However, as of 2020, there is no Union-wide deposit scheme in place. When a national provision is outside the scope of the relevant directives, its compatibility with Articles 34-36 TFEU has to be assessed.

4.11. Reimbursement and parallel imports

Reimbursement: EU law does not detract from the power of the Member States to organise their social security systems (163); in the absence of harmonisation at EU level, the laws of each Member State determine the circumstances in which social security benefits are granted. However, those laws may affect marketing possibilities and in turn may influence the scope for importation. It follows that a national decision on reimbursement of pharmaceuticals may have a negative impact on their importation.

Furthermore, it follows from the Duphar judgment that provisions of national legislation governing the reimbursement of medical devices within the framework of the national health-care scheme may be compatible with Article 34 TFEU, provided certain conditions are met. The determination of the products subject to reimbursement and those which are excluded may not involve discrimination regarding the origin of the products and must be carried out on the basis of objective and verifiable criteria. It should, moreover, be possible to amend the list of reimbursed products whenever compliance with the specified criteria so requires. The ‘objective and verifiable criteria’ referred to by the Court may concern the existence on the market of other, less expensive products having the same therapeutic effect, the fact that the items in question are freely marketed without the need for any medical prescription, or the fact that products are excluded from reimbursement for reasons of a pharmaco-therapeutic nature justified by the protection of public health.

Procedural rules for establishing national reimbursement decisions were specified by Council Directive 89/105/EEC relating to the transparency of measures regulating the prices of medicinal products for human use and their inclusion in the scope of national health insurance systems (164).

In Decker (165), the Court found that national rules under which reimbursement of the cost of medical products is subject to prior authorisation by the competent institution of a Member State when products are purchased in another Member State, constitute a restriction on the free movement of goods within the meaning of Article 34 TFEU. In this case, since they encourage insured persons to purchase those products in their home Member State rather than in another Member State, and are thus liable to curb the import of products in other Member States.

Parallel imports: Parallel trade in products is a lawful form of trade within the internal market. It is ‘parallel’ in the sense that it involves products that are of the same description but from a different batch to products marketed through manufacturers’ or original suppliers’ distribution networks, but takes place outside (often alongside) those networks. Parallel trade comes about as a result of price divergence of pharmaceuticals (166) or pesticides (167), e.g. when Member States set or by other means control the price of products sold within their respective markets. Parallel trade creates in principle healthy competition and price reductions for consumers and is a direct consequence of the development of the internal market, which guarantees the free movement of goods and prevents the compartmentalisation of national markets (168).

Although the safety and initial marketing of medicinal products are regulated by EU legislation, the principles surrounding the legality of parallel trade in these products have emerged from judgments of the Court based on the Treaty provisions on the free movement of goods (169).

Parallel importers cannot be required to satisfy the same requirements as those applicable to economic operators applying for the first time for a marketing authorisation, provided that the protection of human health is not undermined (170). When the information necessary for the purposes of public health protection is already available to the competent authorities of the Member State of destination as a result of the first marketing of a product in this Member State, a parallel imported product is subject to a licence granted on the basis of a proportionally ‘simplified’ procedure (compared to a marketing authorisation procedure), provided:

— The imported product has been granted a marketing authorisation in the Member State of origin, and regardless of the expiration of that marketing authorisation, in particular when the reference authorisation expires for reasons other than the protection of public health, i.e. solely based on the wish of the holder of the reference authorisation (171), and

— The imported product is essentially similar to a product that has already received marketing authorisation in the Member State of destination, meaning that the two products do not have to be identical in all respects but they should have at least been manufactured according to the same formulation, using the same active ingredient, and that they also have the same therapeutic effects (172). Thus, a refusal to issue a marketing authorisation cannot be justified on grounds of protecting public health if that refusal is based solely on the fact that the two medicinal products do not have the same origin (173).

Additionally, national authorities cannot refuse granting a parallel import license solely on grounds linked to the absence of documentation related to the medicinal product subject to parallel import, if they have available legislative and administrative means to obtain the documentation in question (174). Nor can they refuse, in the case of veterinary medicinal products, a parallel import licence for those wishing to import for use on their own stock farm (175).

Moreover, parallel trade needs to be distinguished from re-importation. In the case of pharmaceuticals, for example, this means transactions where medicinal products are imported into a Member State in which they are authorised, having been previously obtained by a pharmacy in another Member State from a wholesaler in the importing Member State. In this respect the Court held that a product manufactured in a Member State which is exported and then re-imported into this Member State constitutes an imported product in the same way as a product manufactured in another Member State (176). However, the Court pointed out that these findings do not apply if it is established that the products concerned were exported for the sole purpose of re-importation in order to circumvent legislation such as that under consideration (177).

4.12. Obligation to use the national language

Language requirements imposed in non-harmonised areas may also constitute a barrier to intra-EU trade in case they result into an additional burden on products originating in other Member States. Hence, they may be prohibited under Article 34 TFEU when products coming from other Member States have to be given a different labelling, which results in additional packaging costs (178). In some instances, it may however be necessary to use national language in order to ensure that the consumers easily understand the information concerning the product in question (179).

In its judgment in Yannick Geffroy (180), the Court ruled that Article 34 TFEU ‘must be interpreted as precluding a national rule [...] from requiring the use of a specific language for the labelling of foodstuffs, without allowing for the possibility of using another language easily understood by purchasers or of ensuring that the purchaser is informed by other means’.

When it comes to determining the language easily understood by consumers, the Court stated in Piageme (181) that various factors may be taken into account such as ‘the possible similarity of words in different languages, the widespread knowledge amongst the population concerned of more than one language, or the existence of special circumstances such as a wide-ranging advertising campaign or widespread distribution of the product, provided that it can be established that the consumer is given sufficient information’.

It follows from the general principle of proportionality that the Member States may adopt national measures requiring that certain information with regard to domestic or imported products must be given in a language that is easily understood by the consumer. However, the national measure at issue must not exclude the possibility to use other means of informing the consumers, such as designs, symbols and pictograms (182). Finally, a measure must be restricted to the information made mandatory by the Member State concerned and for which the use of means other than translation would not be suitable for providing consumers with the appropriate information.

4.13. Restrictions on the importation of goods for personal use

Article 34 TFEU not only gives companies the right to import goods for commercial purposes but also entitles individuals to import goods for personal use as shown in Schumacher (183). Restrictions with regard to importation of goods for personal use mostly relate to products which are linked with potential risks to human health, such as alcohol, tobacco and medicines. In Schumacher, a private individual ordered for his own personal use a medicinal preparation from France. However, the customs authorities in Germany, where the individual was residing, refused to grant clearance of the product in question.

The national court asked whether legislation which prohibited a private individual from importing a medicinal preparation for their own personal use that was authorised in the Member State of importation, was available there without prescription, and had been purchased at a pharmacy in another Member State, was contrary to Articles 34 and 36 TFEU. The Court held that such a legislation constituted a breach of Article 34 TFEU, which could not be justified on grounds of the protection of public health. It explained that the purchase of medicinal preparations at a pharmacy in another Member State provided a guarantee of safety equivalent to that of a domestic pharmacy.

However, as shown in Escalier Bonnarel (184) , private individuals who import goods for use on their own property may also be subject to certain obligations applicable to importers for commercial purposes. In this case, criminal proceedings were brought against two individuals who were accused of having in their possession, and intending to use, pesticide products designed for agricultural use and not having a marketing authorisation. The accused submitted that the national authorisation requirements could not be applied to farmers who were importing products for their own purposes. The Court held that Member States are obliged to submit imports of plant protection products into their territory to a procedure of examination, which can take the form of a ‘simplified’ procedure, the purpose of which is to verify whether a product requires a marketing authorisation or whether it should be treated as already having been authorised in the Member State of importation (185). The Court pointed out that the above principles apply irrespective of the purpose of importation.

5. AGRICULTURAL PRODUCTS

It is worth noting that agricultural products are at the heart of Court rulings on the internal market. This point addresses some specific issues related to these products. Our starting point may be found in Article 38(2) TFEU which states that, save as otherwise provided in Articles 39 to 44 TFEU, the rules laid down for the establishment of the internal market shall apply to agricultural products (these products are defined in the first paragraph of this provision and are listed in Annex I TFEU).

One question which has been the subject of recent judgments of the Court concerns the extent to which Member States may legislate in areas covered by a common organisation of the market. The Court has held that under the common agricultural policy, a competence shared between the European Union and the Member States in accordance with Article 4(2)(d) TFEU, the Member States have legislative powers which allow them to exercise their competence to the extent that the European Union has not exercised its competence (186).

Furthermore, according to settled case-law, where there is a regulation on the common organisation of the markets in a given sector, the Member States are under an obligation to refrain from taking any measures which might undermine or create exceptions to it. Rules which interfere with the proper functioning of a common organisation of the market are also incompatible with such a common organisation, even if the matter in question has not been exhaustively regulated by it (187).

As regards the setting of a minimum price per unit of alcohol for the retail selling of wines, in the absence of a pricing mechanism, the free formation of selling prices on the basis of fair competition is a component of the Regulation (EU) No 1308/2013 of the European Parliament and of the Council establishing a common organisation of the markets in agricultural goods (188) and constitutes the expression of the principle of free movement of goods in conditions of effective competition (189).

Nevertheless, the establishment of a common market organisation does not prevent the Member States from applying national rules intended to attain an objective relating to the general interest other than those covered by that common market organisation, even if those rules are likely to have an effect on the functioning of the common market in the sector concerned (190).

In its judgment in the Scotch Whiskey case, the Court came to the conclusion that Regulation (EU) No 1308/2013 establishing a common organisation of the markets in agricultural products must be interpreted as not precluding a national measure which imposes a minimum price per unit of alcohol for the retail selling of wines, provided that that measure is in fact an appropriate means of securing the objective of the protection of human life and health and that, taking into consideration the objectives of the common agricultural policy and the proper functioning of the common organisation of agricultural markets, it does not go beyond what is necessary to attain that objective of the protection of human life and health.

In Case C-2/18, the Court took the view that by adopting Regulation (EU) No 1308/2013, in particular, Article 148 thereof, the European Union has not exhaustively exercised its competence in the area of contractual relations between the parties to a contract for the delivery of raw milk. Therefore, that regulation cannot be interpreted as prohibiting Member States, in principle, from adopting measures in that area (191).

The Court also considered that it cannot be established from references to certain unfair practices that the objective of combating unfair practices pursued by the legislation at issue is covered by Regulation (EU) No 1308/2013, especially since such practices are not referred to as a whole, nor regulated by or even identified in that regulation (192). The Court held that this review of proportionality must be carried out by taking into consideration, in particular, the objectives of the common agricultural policy and the proper functioning of the common market organisation, which necessitates that those objectives be weighed against the objective pursued by the national legislation, which is to combat unfair commercial practices (193).

In this case, the Court concluded that the rules at issue do not go beyond what is necessary to achieve the objectives which they pursue. However, it is for the referring court, which is the only court with direct knowledge of the dispute before it, to determine whether the measures adopted to combat unfair commercial practices by strengthening the bargaining power of milk producers who do not belong to a recognised milk producer organisation and, therefore, to contribute to the viable development of production and guarantee a level playing field for milk producers by limiting the principle of freedom to negotiate the price, do not go beyond what is necessary (194).

6. EXPORT RESTRICTIONS (ARTICLE 35 TFEU)

Article 35 TFEU states ‘Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States’.

6.1. Definition of ‘Exports’

In the context of Article 35 TFEU, the term ‘exports’ refers to trade between Member States, i.e. exports from one Member State to another. It does not apply to exports to a country outside of the EU.

6.2. Quantitative restrictions and measures having equivalent effect

Although Articles 34 and 35 TFEU have very similar wording, the Court of Justice has treated these two provisions distinctly. Essentially, Article 35 TFEU only applies to measures which discriminate against goods. This principle was established in the Groenveld case (195), in which the Court stated that Article 35 TFEU ‘concerns national measures which have as their specific object or effect the restriction of patterns of exports and thereby the establishment of a difference in treatment between the domestic trade of a Member State and its export trade’. If this provides a ‘particular advantage for national production or for the domestic market of the State in question at the expense of the production or of the trade of other Member States’ then Article 35 TFEU operates (196).

There are several reasons for the Court’s narrow interpretation of Article 35 TFEU as compared to its jurisprudence on Article 34 TFEU. In the case of imports, non-discriminatory measures may place a dual burden on importers if they must comply with the rules in their own country and in the country of importation. Thus, such measures are perceived as being justly caught by EU law protecting the internal market. In contrast, this is not the case for exporters, who merely follow the rules laid down for the domestic market. Secondly, if the scope of Article 35 TFEU were too wide, it could encompass restrictions which have no bearing on intra-EU trade.

In the Rioja case, the difference in treatment resulted from better manufacturing or trading conditions for domestic companies (197). In Parma, this was brought about by procuring a special advantage for undertakings situated in the region of production. The use of the protected designation ‘Prosciutto di Parma’ for ham marketed in slices was subject to the condition that slicing and packaging operations be carried out in the region of production (198). Such benefits for the domestic market lead to competitive disadvantages for businesses established in other Member States due to either additional costs that may occur or the difficulty of procuring certain products necessary to enter into competition with the domestic market.

In some of its more recent Article 35 TFEU decisions, the Court introduced an alternative approach to the last requirement of the Groenveld test (‘at the expense of the production or of the trade of other Member States’) (199). In Gysbrechts (200), the Court dealt with Belgian legislation prohibiting the seller from requesting any payment in advance or in the 7 day ‘withdrawal’ period during which a consumer can withdraw from a distance contract. In this judgment, the Court confirmed the definition established in Groenveld. Nonetheless, it reasoned that although the prohibition on receiving advance payments is applicable to all traders active in the national territory, its actual effect is generally greater on cross-border sales made directly to consumers, and thus on goods leaving the market of the exporting Member State than on the marketing of goods in the domestic market of that Member State. Interestingly, in this case the effects of the barrier primarily hampered the trading activities of companies established in the Member State of export and not in the Member State of destination (201).

The approach in Gysbrechts was endorsed in New Valmar, a case in which undertakings with a place of establishment within the territory of a Member State were required to draw up all invoices relating to cross-border transactions exclusively in the official language of that State. If this was not done, the invoices concerned would be declared null and void by the national courts of their own motion. Here, the primary criterion for the Court appeared to be whether the actual effect of