Seminar 5 AND 6 - EU free movement of goods and private enforcement PDF

Preview

Summary

EU free movement of goods and private enforcement ...

Description

LAWU9LC LAW OF COMMERCE SEMINAR 5: EU FREE MOVEMENT OF GOODS Snow Ploughs Limited is a UK company based in Glasgow which manufactures snow ploughs (the ‘Company’). The EU passes (fictional) Directive 2/16 on the ’harmonisation of certain measures relating to the manufacture and use of snow ploughs’ (the ‘Directive’). Articles 1 to 4 of the Directive state as follows: “1. All snow ploughs in the EU must be capable of operating in weather temperatures of minus 19 degrees Celsius (-19C) 2. All snow plough will be designed in such a way as to afford drivers a comfortable and heated cabin and all shall contain an emergency generator which will ensure heat in the cabin and the operation of an emergency telephone and GPS system to allow the vehicle to be located in the event that it breaks down or for some other emergency. 3. Save for the harmonisation measures in articles 1-2 above, the provisions of Articles 34-36 TFEU shall apply to snow ploughs. 4. Member states have until 14 July 2019 to bring their laws into conformity with this directive.” Fred Davies is the managing director of the Company. Fred is keen to pursue sales of his ploughs to other EU member states. One country he is keen to work with is the Czech Republic, as he spent part of his gap year in Prague and speaks the language pretty well. He instructs local Czech lawyers and they draw his attention to the following (fictional) law which the Czech parliament has passed in May 2018. In relevant part the law provides: “Snow ploughs must be powered by an engine of at least 4000 bhp in order to be lawfully sold in the Czech Republic.” The explanatory memorandum which accompanies the act states: “The 4000 bhp requirement is a reflection of the fact that the Czech winter is usually particularly harsh and in order to clear snow effectively and to ensure the safety of the driver of the plough, the high 4000 bhp requirement is a reasonable means of ensuring these policy imperatives” Fred’s lawyers do some investigating and it transpires that about 95% of the plough sold in the Czech Republic in the last year are those manufactured by ABC GmBH a German based company owned by German and Czech investors, all of whose snow ploughs have a bhp of over 4100. The Company then signed a contract in Poland for the sale of 20 snow ploughs to the Warsaw district council. As they are transported via Germany, German customs officials stop the lorries outside Berlin, and ask the drivers if they have driven through Oxfordshire on their way to Germany. The drivers respond that they have. The customs officials then tell the drivers that they will have to charge them 20 Euros per vehicle to check if they are carrying the TB virus (assume that there has been a confirmed outbreak in Oxfordshire). Fred is not too pleased to hear about this charge. Have the Czech Republic and Germany breached their obligations under Single Market Law?

FREE MOVEMENT OF GOODS The legal issue in this scenario is if the regulations that the Czech Republic and the charges that Germany are imposing have breached their obligations under Single market law. The law on the first issue comes from article 34-36 of the Treat of the Functioning of the European Union (TFEU) and the case of Cassis on the principle of mutual recognition. Art 34 and 35 TFEU prohibits quantitative restrictions/all measures have in equivalent effect to quantitative measures on imports and exports. Art 36 sets out exceptions where the prohibitions in art 34 and 35 will not apply. These need to be justified on the 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 protection of industrial and commercial property. The case of Cassis is of particular importance here. This case involved liquor with a lowlevel alcohol content produced in France. Germany set new legislation for the minimum level of alcohol for a product to be sold as an alcoholic drink. The French product fell below this level and therefore could not be sold in the same way in Germany as it was in France. The indistinctly applicable measure was attempted to be justified on the basis of the protection of public health, but this was rejected as being disproportionate because labelling the bottles would have protected the consumer's health and thus the measure was not necessary for consumer health thus the requirement was termed illegal under EU law. This case established that there has to be harmonization and mutual recognition. If there is no harmonisation in EU law already then member states have to mutually recognise each other’s requirements. The law on the second issue comes from art 30 TFEU and the Statistical Levy/Storage cases on measures equivalent to custom duties. Art 30 TFEU prohibits customs duties on imports and exports or charges having equivalent effect in Member States. This also applies in cases of duties of a fiscal nature. Statistical Levy involved Italian authorities trying to charge an importer for a statistical investigation defining a custom duty as ‘a good charged because a good has crossed the border’. Commission v Belgium (‘storage case’) demonstrated that member states can carry out important tests/checks but cannot charge for them. Applying this to the scenario it is clear that first issue of the regulations imposed by the Czech Republic are fair for the sale of snowploughs. The issue of these raised standards falls under the issue of Mutual Recognition. In a normal scenario a country whose products meet the requirements of other Member states would be allowed to sell in the Member state with the raised standards. However, Cassis demonstrates that it could only go over National Law if there was not an imperative reason for the raised standards. From the explanatory memorandum for the 2018 Law it clearly states that the inclusion of this standard for engines is imperative for public safety and the effective operation of these snowploughs. Applying this it could therefore be argued that it is imperative this standard is met and thus Czech Republic aren’t in breach of their obligations under single market law. Secondly in relation to the charges that Germany are trying to impose it is clear that Germany are within their rights to check the goods. Applying Statistical Levy, it they cannot charge for this cannot levy a charge just for something being brought in and are testing for the public safety and function and therefore they cannot try claim 20 Euros per plough to do this test. Using the storage case, it is obvious that this is to replicate a single market. If it were one big country, you would not charge for moving goods to a different place in that same country. In the same way you would not charge goods being moved within member states and therefore Germany have no grounds to Impose a charge. Therefore, Germany are in breach of these obligations. In conclusion it can be argued that the Czech Republic are not in breach however Germany are in breach of their obligations under EU Single Market Law.

SEMINAR 6: PRIVATE ENFORCEMENT MEASURES CONSIDER WHAT (PRIVATE ENFORCEMENT) MEASURES YOU WOULD TAKE IF YOU WERE SNOW PLOUGHS LTD The legal matter to look at here is which private enforcement measures are available to Snow Ploughs Ltd after the breach of treaty provisions by Germany. The law on this issue comes from the case of Van Gen den Loos v Netherlands (1963). This case demonstrates that there can be no exception to the rule that there can be no taxes at borders between Member States. The goods in question were reclassified by the Dutch government so they become subject to a higher rate of duty. The importers attempted to use Art 30 to challenge the new duty in national courts. HELD - the CJEU ruled that as the new duty imposed a higher rate of import duty on the importer, it was a direct contravention of what is now Art 30, and that this Art provided a right which could be enforced by individual EU citizens. Also, the case establishes that a treaty article can be relied on by a company or individual in a national court against the state if it is sufficiently clear, precise and unconditional (vertical direct effect of treaty articles). The case of Defrenne v Sabena (1976) illustrated that an individual can sue another individual or the state if their rights contained in treaty articles are breached (horizontal direct effect). Applying this to the scenario it is clear that Snow Ploughs have two private enforcement options in relation to Germany’s breach of treaty articles. They can sue the state as well as other individuals as it has been shown in the above cases that an article in a treaty has vertical and horizontal direct effect. EXPLAIN THE PURPOSE/S OF THE EU ANTITRUST RULES EU antitrust rules consist of Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) and prohibits anti-competitive business practices. First, Article 101 of the Treaty prohibits agreements between two or more independent market operators which restrict competition. This provision covers both horizontal agreements (between actual or potential competitors operating at the same level of the supply chain) and vertical agreements (between firms operating at different levels, i.e. agreement between a manufacturer and its distributor). Only limited exceptions are provided for in the general prohibition. The most flagrant example of illegal conduct infringing Article 101 is the creation of a cartel between competitors, which may involve price-fixing and/or market sharing. Second, Article 102 of the Treaty prohibits firms that hold a dominant position on a given market to abuse that position, for example by charging unfair prices, by limiting production, or by refusing to innovate to the prejudice of consumers. Here, market definition is key, as is establishing dominance and abuse. Before assessing dominance, the Commission defines the product market and the geographic market. Product market: the relevant product market is made of all products/services which the consumer considers to be a substitute for each other due to their characteristics, their prices and their intended use. Geographic market: the relevant geographic market is an area in which the conditions of competition for a given product are homogenous. (The sector-specific rules for the network sectors are variations on this theme.) Dominance must always be assessed in relation to a specific product and geographic market. Examples of behaviour that may amount to an abuse include requiring that buyers purchase all units of a particular product only from the dominant company (exclusive purchasing); setting prices at a loss-making level (predation); refusing to supply input indispensable for competition in an ancillary market; charging excessive prices.

EXAM Under time limit 2 hours 30 mins, then uploaded 1200 per question Past papers are getting sent out Formative question with three answers from students then marks them...