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18 February 2020 1747216 Sara Demir Law of the Internal Market Free Movement of Goods: quanative restrictions Words: Group A Dr. Vigjilenca Abazi

Free Movement of Goods: Quantitive restrictions Case 1

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Table of contents

1. Quantative restrictions 2. The Italian Bill 2.1. Issue 2.2. Rule 2.3. Application 2.4. Conclusion 3. Walter Infiltration System 3.1. Issue 3.2. Rule 3.2. Application 3.3. Conclusion 4. Hallmarking 4.1. Issue 4.2. Rule 4.3. Application 4.4. Conclusion 5. Prohibition to sell re-enactment weapons over the Internet 5.1. Issue 5.2. Rule 5.3. Application 5.4. Conclusion

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1. Quantitive restrictions Article 34 TFEU is the central provision that prohibits quantitive restrictions on imports and measures having equivalent effect. Article 35 TFEU provides the similar rules according to exports. Article 36 TFEU provides exceptions for certain cases, allowing states to place restrictions on the free movement of goods. However, the ECJ has interpreted this article strictly to ensure that discriminatory restrictions are not easily justified. These rules are necessary in the light of the articles 28-33 TFEU, that create a customs union by eliminating custom duties between member states. The ECJ has given a broad interpretation to ‘measures having an equivalent effect’ and has captured direct and indirect discrimination.1 It stated that article 34 TFEU also applies where there is no discrimination.2

Article 34 TFEU applies to EU measures and measures adopted by Member States. The notion of a quantitive restriction was defined in the Geddo-case3: ‘measures which amount to a total or partial restraint of, according to the circumstances, imports, exports or goods in transit.’

If we’re not speaking about a quantitive restriction, we could have a measure having an equivalent effect (MEQR). The definition is found in the Dassonville-case4: ‘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 quantitive restrictions.’ It is not required that the rules actually discriminate between domestic and imported goods.5 The Commission v Ireland (Buy Irish-case) stated that it was not required that rules result in actual hindering of trade.6 The crucial element of the measure is its effect, a discriminatory intent is not required.7

Directe 70/50 identifies two types of MEQR’s: distinctly (DA MEQR) and indistinctly applicable (IA MEQR). Arquably the Court also added a third type and called them ‘any other measures that hinder or inhibit market access’.

1 P. Craig and G. de Búrca, European Union Law: substantive law, Oxford, Oxford University Press, 2015, 59-60. 2 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntweing [1979] ECR 649. 3 Case 2/73 Geddo v Ente Nazionale Risi [1973] ECR 865. 4 Case 8/74 Procureur du Roi v Dassonville, [1974] ECR 837. 5 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntweing [1979] ECR 649. 6 Case 249/81 Commission v Ireland [1982] ECR 4005. 7 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntweing [1979] ECR 649.

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The hinder can be a dual-burden rule or an equal-burden rule. We speak of a dual burden rule when a state A imposes a rule on the content of goods. The goods from state B have already complied with state B’s rules and must now also comply with State A’s. These rules relate to product requirements (e.g. size, form, labelling, packaging…).8 According to the Cassis de Dijon case such rules are prohibited, unless they are necessary for achievement of mandatory requirements.9 The equal burden rule applies to all goods, irrespective of origin. In some matter they regulate trade. Those rules can be justified if §16 of the Keck-case is applicable.10 In this case it is provided that those provisions apply to all affected traders within the national territory and that they affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States.

A breach can be justified. Therefore, we can use article 36 TFEU. The interprets this article strictly. Arbitrary discrimination is prohibited. Proportionality is necessary and fundamental rights are important. According to the Cassis de Dijon-case the Rule of Reason is also a way of justification.11 This rule only applies to IA MEQR’s or measures hindering or limited market access. The conditions are the following: no harmonization, indistinctly applicable rule, justified by a mandatory requirement in the public interest and proportionality (suitable and necessary).

2. The Italian bill 2.1. Issue The Shelby Company sold a consignment of assorted car parts to Mr. Sabini, a long-time client of the company. Mr. Sabini requests a bill in Italian, according to him, that would be required in the light of the audit to which he is subject. Michael would like to give him an Italian bill but is bound by the Irish rules that say that a bill issued by a company established in Ireland may only be issued in English or Irish. Member state: asking bills in only one language. You as an exporter: harder for you to do business because you have to comply with a national rule. Is the measure in compliance with EU-law?

8 Case 261/81 Walter Rau Lebensmittelwerke v de Smedt Pvba [1982] ECR 3961. 9 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntweing [1979] ECR 649. 10 Case C-267/91 and 268/91, Bernard Keck and Daniel Mithouard, [1993] ECR I-6097 11 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntweing [1979] ECR 649.

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2.2. Rule Art. 35 TFEU prohibits quantity restrictions on exports and all measures having equivalent effect. To justify this rule, we can invoke art. 36 TFEU or the Rule of Reason in the Cassis de Dijon-case.12 Both: import and export (in principle export)  sometimes hard to tell Is this a QR? Geddo-case “Measures which amount to a total or partial restraint of, according to the circumstances, imports, exports or goods in transit.”  Not the case Is this a MEQR? Dassonville-case “All trading rules enacted by MS’s which are capable of hindering, directly or indirectly, actually or potentially, intra-community trade.” (no requirement of discrimination)  Distinctly: if based on origin  are not allowed (not if the rule affects everyone)  jusitification under art. 36 TFEU  Indistinctly: Cassis de Dijon-case and Walter Rau-case  create barriers between trade of MS’s 

Art. 36 TFEU

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Rule of Reason: justifications

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Principle of mutual recognition: accept the rules  prevent a dual burden: that the trader has to comply with the national rules and with the rules from the other MS’s

2.3. Application In the New Valbar BVBA-case13 the court dealt with the same circumstances. In case there was a Flemish rule that companies located in Flanders have to write the bill in Dutch. The rules applied to all Dutch speaking Belgian companies, no matter where the product comes from. We speak of an indirect discrimination.

The court ruled that there might be a justification under article 36 TFEU. But the justification needs to pass the test of proportionality. In case it did not pass that test, less far going measures could have been taken. Proportionality test = Cassis de Dijon Arbitrary discrimination = there has to be some kind of reason. A rule has to make sense. Disguised restriction = not actually trying to protect e.g. public health but try to discriminate. Rule of reason (Cassis de Dijon): 12 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntweing [1979] ECR 649.

13 Case C-15/15 New Valmar BVBA v Global Pharmacies Partner Health Srl [2016] ECLI:EU:C:2016:464. 5

 language requirement = a dual burden rule 1) No harmonization No 2) Indistinctly applicable rule Yes 3) Justified by a mandatory requirement in the public interest Excuse authorities: promoting the use of official language  did not pass the test 4) Proportionality  Suitable: does this rule fit/ makes sense with the goal I’m trying to reach Maybe suitable  Necessary: okay it does fit, but is it necessary, can I do something else? It’s not necessary, there were other ways to protect the language  not proportionate In this case English is the prescribed language. This language can be understood by everyone, due the principle of proportionality is fulfilled.

2.4. Conclusion The Irish law that a bill issued by a company established in Ireland may only be issued in English or Irish, is lawful under EU-law. The rule is a MEQR, prohibited under art. 35 TFEU, it can’t be justified by art. 36 TFEU because the condition of proportionality is not fulfilled.

3. Water filtration system 3.1. Issue Thomas is struggling with the water filtration system. He has been looking for a new one. He has found a relatively new company in Italy. The inspector tells him hat Thomas can’t use such a system because the Irish Building Standards don’t allow the use of this particular type of water infiltration mechanism. Product is not allowed to be used because the Irish Building Standards do not allow the use. Commission v. Italy (trailers) = first case about the use of products (not about the composition/ not about the way it’s being sold) Is this rule about the use of the good lawful under EU-law?

3.2. Rule 6

According to art. 34 TFEU quantitive restrictions on imports and measures having equivalent effect are prohibited. To justify this rule, we can invoke art. 36 TFEU or the Rule of Reason in the Cassis de Dijon-case.14 QR? Geddo-case: No MEQR? Dassonville -Directly -Indirectly: in case (because nothing to do with origin) Cassis de Dijon: rule of reason

3.3. Application The circumstances in the SC Capoda Import-Export SRL-case15 are similar. In this case the Romanian authorities required a specific Romanian homologation procedure according to their own national rules. The spare parts were produced in conformity with German law. This is a breach of the principle of mutual recognition16. This principle protects the main goal of the single market: to treat goods of other Member States as if they are domestic goods. The Irish rule can’t be justified. There are no justifications available.

Commission v. Italy (Trailer Case) 

Prohibition for motor trailers to use them on the road

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Rule about the use of products

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Court: any measure inhibits or limits market access = a MEQR

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Is this a new category? Or a subcategory of a MEQR = discussion

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We treat it as a subcategory of a MEQR

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Part of indirectly discrimination (subcategory)  origin doesn’t matter

= a measure hindering or limiting market access (use of products)

Justification: 1) Art. 36 TFEU  member states in this case are trying to fall out of the application of art. 34 and 35 TFEU. When MS’s are trying to create rules about the use, those rules create limits for market access. So the rule does fall under art. 35 TFEU, it is an MEQR.

14 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntweing [1979] ECR 649.

15 Case C-354/14 SC Capoda Import- Export SRL v Registrul Auto Român, Benone-Nicolae Bejan [2015]. 16 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntweing [1979] ECR 649.

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2) Cassis de Dijon test 1) Harmonisation: no 2) Indistinctly applicable rule: established already 3) Justified by a mandatory resquirement in the public interest?  What can Ireland say here? Public health: we have standards. 4) Proportionality -Suitable: is having measures corresponding to protecting health suitable? Yes -Necessary: You can argue in both ways.  Yes: health for citizens is very important, we have standards  No: Ireland can have so many other measures, this one is bad for the single market, we should not have. You stand where you sit (you can argue both ways).

!!!! you ALWAYS have to do all the steps of the analysis ! with justification  always Cassis the Dijon  third step: the grounds of art. 36 TFEU (  other way then we learned in the first two years) ! Proportionality is the most important  will decide if a rule is lawful or not. It doesn’t matter if it is actually in art. 36 TFEU or not.

3.4. Conclusion When in the single market the goods are already lawfully produced in one Member state, the homologation procedure is too much of a burden. According to art. 34 TFEU the rule is unlawful under EU-law.

4. Hallmarking 4.1. Issue During an event in France, an inspector of the French Consumer Protection Agency confiscates a number of silver bracelets that were made by the Shelby Company because they are not hallmarked. In Ireland this is not necessary. In France, all jewelry must be hallmarked. Does this measure fall under free movement of goods? Requiring something of the product itself.

4.2. Rule

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According to art. 34 TFEU quantitive restrictions on imports and measures having equivalent effect are prohibited. To justify this rule, we can invoke art. 36 TFEU or the Rule of Reason in the Cassis de Dijon-case.17

4.3. Application In the Juvelta-case18, the ECJ dealt with the same circumstances. In case the jewelry was already hallmarked in Poland. The goods would be imported in Lithuania. Lithuania said that it was unlawful that the company would hallmark the jewelry themselves, the Lithuanian authorities should do that. According to the high cost for the company, the Court ruled that such a rule would be unlawful. There are other less far going measures to take. QR? Geddo-case MEQR? Dassonville-case -Indirectly: doesn’t care where the product is coming from Cassis de Dijon 1) Harmonization: no 2) yes: indistinctly applicable 3) France: protection of consumers, they need to have a hallmark, they need to know what product they’re getting. 4) Proportionality: -Suitable: yes -Necessary: not proportionate. There are other ways to protect consumers.

4.4. Conclusion The French rule that all jewelry must be hallmarked is in conflict with art. 34 TFEU. The rule is unlawful under EU-law.

5. Prohibition to sell re-enactment weapons over the Internet 5.1. Issue Arthur sells re-enactment weapons through the web-shop of the Shelby Company. A Greek customer wants to buy an axe but finds out that re-enactment weapons may not be sold over 17 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntweing [1979] ECR 649.

18 Case C-481/12 Juvelta v Lietuvos prabavimo rūmai [2014]. 9

the Internet in Greece. They can only be sold in specialized shops with a special license from the Greek Ministry of Defence. This is about how a product must be selt  Keck-case. 5.2. Rule According to art. 34 TFEU quantitive restrictions on imports and measures having equivalent effect are prohibited. To justify this rule, we can invoke art. 36 TFEU or the Rule of Reason in the Cassis de Dijon-case.19 (= wrong) Jusitification = the Keck-case because it is a equal-burden rule. For dual burden rules we use the justification in the Cassis the Dijon-case  the rule of reason.

5.3. Application Rule = indirectly applicable Equal burden rule: applies to all goods, irrespective of orgigin Rules on when, where, when, how… (Karner-case) Such rules can also hinder the internal market (Dassonville-case)  discrimination is not needed Can these rules be caught by art. 34 TFEU? The Keck-case20 is important according to these circumstances. In paragraph 16 this case states that the rule must affect domestic and traders from other Member States. Besides the rule must have the same effect in law and in fact. 2 conditions: 1) Does it apply to all traders? 2) Is the rule equivalent in rule and in fact? In this case we can use a justification in article 36 TFEU. Public security is a ground for justification. But the measure must also be proportionate, in case that condition is also fullfilled. Doc Moris-case (Germany- NL) 

Proportionality test was not okay

19 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntweing [1979] ECR 649. 20 Case 267 Criminal proceeding against Keck and Mithouard [1993] ECR I-6097.

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If the conditions in Keck are not fulfilled  MEQR  indirectly  Justification (Cassis de Dijon)

Keck = equal burden  Don’t use it in case of a sellings arrangement/ use of product !!! Talk about only the cases that matter with the issue Cassis de Dijon = dual burden

5.4. Conclusion The rule in Greece that re-enactment weapons may not be sold over the Internet, is not in conflict with EU-law because according to the Keck and Mithouard-case it is a certain selling arrangement, and is not caught by art. 34 TFEU.

Case 2 Issue Anna is a guitar builder from Croatia. She sells the majority of her guitars via a web shop (=distance transactions). An European Directive, that is implemented in national law, prohibits sellers from requiring any payment in advance during the fourteen day cooling off period. A higher level of protection is allowed. When consumers want to buy a guitar in Anna’s web shop, they have to pay with credit card. Anna is violating the Consumer Fairness Act because she is able to deduct money from their credit cart during the cooling off period. Anna thinks she is disadvantaged because other sellers who are involved in national distance transactions, are more likely to get their money when a consumer refuses to pay. The vast majority of her orders are coming from other Member States. Anna thinks her right to export guitars is violated.

Rule Article 35 TFEU prohibits quantitive restrictions on and MEEQR on exports between Member States.

Applicaton Case law: Gysbrechts CJEU ruling: Article 35 TFEU does not preclude national rules which prohibit a supplier, in cross-border distance selling, from requiring an advance or any payment from a consumer 11

before expiry of the withdrawl period, but article 35 does preclude a prohibition, under those rules, on requesting, before expiry of that period, the number of consumer’s payment card.

(DUS: je mag geen vooraf betaling vragen tijdens de herroepingstermijn, je mag wel het nummer van de creditkaart vragen)

What kind of rule? Indirectly discriminating  Equal burden rule (how you are selling)  Can it be justified under art. 36 TFEU or ROR? Only in case of a dual burden rule  so not in this case.

 Keck Mithouard-case : conditions The Rule is compatibale with art. 35 TFEU if: 1) The provision applies to all affected traders operating within the national territory  yes 2) They affect in the same manner, in law and fact, the marketing of domestic products and of those from other member states.  no, Anna is more disadvantaged than sellers who buy in their own country

Conclusion The rule constitutes a breach of EU-law.

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