Free Movement of Goods and Article 34 TFEU: A Case Study
This case study concerns the Free Movement of Goods (FMG) in European Union law, specifically the application of Article 34 of the Treaty on the Functioning of the European Union (TFEU). According to Commission v Italy (“Italian Art”): ‘Goods’ are “products which can be valued in money and are capable of forming the subject of commercial transactions.”
Article 34 TFEU
‘Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States’.
Measures having equivalent effect (MHEEs) are defined by the Dassonville case (1974) as follows:
‘All trading rules enacted by Member States capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be considered measures having an effect equivalent to quantitative restrictions’.
a) Customs Inspection of Tomatoes
Customs inspection impeded imports by delaying Italian tomatoes and rendering opened cans unsaleable. This is an MHEE within the Dassonville definition of Art 34 and is therefore unlawful.
However, MHEEs may be justified under Article 36 TFEU:
‘The provisions of Article 34…shall not preclude…restrictions on imports…or goods in transit justified on the grounds of…protection of health and life of humans’.
The UK may seek to justify the inspection of cans of tomatoes on the grounds of ‘protection of the health and life of humans’. However, a measure that is merely a disguised restriction on trade is not justifiable; the UK will have to prove the grounds claimed are genuine.
In criminal proceedings against Sandoz, the Netherlands claimed that the addition of vitamin supplements to foods would be harmful to public health. The risk to health, however, was not general; it existed only where consumption was excessive. The Netherlands could not justify its general prohibition on additives in food.
Where a health risk does exist, the response of the state must be proportionate. In Commission v UK, for example, the establishment of a licensing system to protect the health of domestic poultry in Northern Ireland was deemed proportionate. The additional administrative and financial burdens imposed by the licensing system were justified in the circumstances, given the need to protect the health of the poultry flock. However, extending the licensing system to the rest of the UK (other than Northern Ireland) would be disproportionate; the poultry there was not of the same high standard as poultry in Northern Ireland.
In another Commission v UK case, the systematic checking of sealed cartons of UHT milk rendered the contents unusable, thereby increasing costs to the importer. In the context of the protection of human health, this was disproportionate; the UK could have put in place safeguards equivalent to those prescribed for its domestic production of UHT milk. Certificates of compliance from authorities in the home state could have been required from the importer.
Is the action taken by the UK government proportionate? It would seem difficult for the government to argue successfully that its action in examining every batch of tomatoes is a proportionate response to the perceived problem posed by the existence of white fly.
b) Ban on Alcohol Promotions
A government ban on the sale of alcohol through promotions such as ‘buy one get one free’ would appear to be a restriction on trade between Member States. As such, it would fall within the Dassonville definition as an MHEE. The ban is a trading rule; its imposition by the UK governs the conditions under which alcohol is sold in the UK and is ‘capable of hindering, directly or indirectly, actually or potentially, intra-Community trade’ in alcohol products.
However, Article 34 may not apply if the national measure here can be considered to be a ‘selling arrangement’ which relates to the advertising of goods. This concept was introduced in Keck and Daniel Mithouard.
Keck held that a national measure regarded as a selling arrangement would ‘not be such as to hinder directly or indirectly, actually or potentially, trade between Member States within the meaning of the Dassonville judgment’. National measures must apply to all relevant traders operating within the national territory, and the effect must be the same in law and in fact. Where regarded as a ‘selling arrangement’, a national measure is not classed as an MHEE; consequently, it would be lawful.
The trading rule in this instance, ‘buy one get one free’, may be regarded as a selling arrangement. In Tankstation and Hunermund, Dutch rules providing for the compulsory closure of petrol stations and German rules prohibiting advertising outside pharmacies were held to be selling arrangements. The national rules applied without distinction as to the origin of the products and did not affect the marketing of imports any differently from that of domestic products.
The ban on the sale of alcohol through promotions such as ‘buy one get one free’ shows no discrimination between UK and foreign-owned businesses; it applies equally to all sales of alcohol, whether sold in the UK in shops or supermarkets. Also, the effect of the prohibition on promotions relating to those sales has been the same in fact; no retailer can sell alcohol in this way.
c) Standardization of Tin Sizes
A UK law standardizing tin sizes is an MHEE within the meaning of Dassonville. In Commission v Ireland, an Irish requirement that cement pressure pipes in public tenders comply with national standards was found to be restrictive of imports. A UK law directing the standardized repackaging of imported processed food before sale in the UK is likewise restrictive of trade. The measure breaches the principle of mutual recognition imposed on the host state by Rewe-Zentral. This provides that where a product has been lawfully marketed in another Member State, the host state has to recognize the standards in that state.
In this instance, UK law would not be regarded as a ‘selling arrangement’ because, although concerned with the sale of products, in requiring repackaging it discriminates against imports. In Mars, measures related to the packaging of a product required repackaging of the import before it could go on sale in the German market. Requirements regarding tin sizes would be unlawful, and it seems unlikely that it can be justified as contributing to consumer protection (Rau).
Conclusion
In conclusion, the inspections of tomatoes and the requirements regarding tin sizes are unlawful MHEEs that cannot be justified. The ban on ‘buy one get one free’ offers, however, can be considered a selling arrangement and thus fall outside the scope of Article 34.