Measure having equivalent effect to quantitative restrictions in the case law of the Court of Justice of the European Union concerning freedom of movement of goods — definition of the concept

The prohibition of quantitative restrictions and restrictions having equivalent effect, together with the prohibition of fiscal restrictions, shall form the basis for the functioning of the internal market of the European Union as an economic area without internal borders in which the free movement of goods is guaranteed.

The above mentioned prohibitions result from Article 34 and Article 35 Treaty on the Functioning of the European Union (hereinafter ‘TFEU’) 1 , which, however, does not define these concepts.

The concept of a measure having an effect equivalent to quantitative restrictions is primarily defined in third judgments of the Court of Justice of the European Union (hereinafter referred to as ‘TEU’ or ‘EU Court of Justice’), commonly referred to as the formulas Dassonville, Cassis de Dijon and Keck.

The purpose of this work is to try to define, on the basis of the case law of the TEU, the concept of a measure having a similar effect to quantitative restrictions.

1. Introduction

Freedom of movement of goods is one the key elements of the European Union's policy to establish the internal market. In this respect, this means that Member States remove various barriers which discriminate against goods of other Member States and hinder intra-EU trade.[2].

The prohibition on the application of quantitative restrictions and measures having a similar effect to quantitative restrictions concerns any non-tariff barriers, i.e. measures which are not linked to the levying of any charge on the crossing of the border by goods.

‘The quantitative limit shall be any provision or state measure which restricts partially or completely the import or export of goods on the basis of criteria such as quantity, weight, volume, value or time.

All types of import restrictions should be considered as import restrictions: quotas, plaphones, limits, import and export quotas’ 3 .

In the case of measures having equivalent effect to quantitative restrictions, the lack of a legal definition was indirectly resolved by interpreting the TFEU in the famous rulings: Dassonville, Cassis de Dijon and Keck.

However, there is still a lack of solutions that would effectively address the lack of a clear definition of a measure having an effect equivalent to quantitative restrictions.

2. Dassonville Formula

first the decision of the Court of Justice of the European Union defining a measure having equivalent effect to quantitative restrictions has fallen In 1974 on the famous cause C-8/74 criminal (and civil) proceedings against Benoit and Gustave Dassonville.

The case concerned the absence required by Article 1 Belgian Royal Decree No 57 to 2 December 1934 the certificate of authenticity issued by the product manufacturer.

The Dassonville brothers brought Scottish whisky originally from the UK, not accompanied by a certificate of origin, to Belgium, then issued their own authenticated document. The Belgian authorities therefore accused Benoit and Gustave Dassonville of falsifying and violating the decree.

According to the Dassonville brothers, obtaining this certificate entails significant difficulties in the import of goods, resulting in a violation of the prohibition on Member States to apply measures having a similar effect to quantitative restrictions.

The Court of Justice of the EU reiterated the view of the Dassonville brothers, stating that: ‘any legislation of the Member States relating to trade which may, directly or indirectly, indeed or potentially impede intra-Community trade should be regarded as having equivalent effect to quantitative restrictions’ 4 .

The Dassonville formula very widely outlines a circle of behaviours of a Member State that conflict with Article 34 TFEU[5]. The statement ‘trade rules’ does not refer to the production stage, as it concerns only the distribution process and the trade in goods, and the above-mentioned prohibition applies to both legislation and any action and omissions by a Member State affecting restrictions on trade in goods[6].

It follows from the wording of the Dassonville formula that measures affecting imports may take the form of measures directly and indirectly discriminatory. Regulations which treat imported goods in a way clearly worse than domestic goods are direct.

In the case of indirect discrimination, the rules apply in the same way to domestic and imported products, while as a result of the requirement to comply with additional criteria, goods are imported in a situation worse than national.

The Dassonville formula adds a criterion of measures that effectively or potentially restrict intra-Community trade. Judgment of the Court of Justice in cases C-177 and C-178/82, i.e.

The criminal proceedings against Van de Haar have been defined as follows: ‘If a national measure is capable of affecting trade between Member States, it must be classified as having equivalent effect to quantitative restrictions, even if the impact is small and even if the imported product can be sold in another way’ 7 .

This ruling excludes the de minimis rule, as it indicates that, in order for a measure to be classified as illegal, it does not have to constitute a significant barrier to trade between Member States, but it is sufficient that the substance of the infringement falls within the scope of application Article 34 TFEU.

The purpose of eliminating this principle from the free movement of goods is to protect small-scale businesses or the production of niche goods. In later years, the Dassonville Formula was repeatedly duplicated and developed by the extensive case law of the EU Court: “Starting with the judgment of 11 July 1974 on C-8/74 Dassonville, is established in the caselaw that this provision, in the relevant context, should be interpreted as intended to remove any, direct or indirect, actual or potential obstacles to intra-Community trade’ 8 .

3. Cassis de Dijon Formula

A broad understanding of the Dassonville formula has led to virtually any measure taken by a Member State being declared incompatible with the Treaty, whether it is discriminatory or not.

In order to narrow down the interpretation of the concept of a measure having equivalent effect to quantitative limits, a compromise was reached in the famous formula Cassis de Dijon, which fell into the case of Rewe-Zentral A.G. v Bundesmonopolverwaltung für Branntwein[9].

The case concerned blackcurrant liqueur Cassis de Dijon with alcohol content in the range 16-22%. The German company Rewe-Zentral A.G. requested the Federal Spiritus Monopoly to authorise imports of the liqueur in question.

The Authority refused to grant an authorisation, citing national rules which provide that the minimum alcoholic strength of the liqueur must be at least 25%. The importer contested the decision in the main proceedings of the Federal Republic of Germany, which became the reason for the preliminary judgment of the ECJ.

The Court of Justice of the EU has ruled that a measure having equivalent effect to quantitative restrictions is ‘obstacles to the free movement of goods resulting, in the absence of harmonisation of legislation, from the application to goods originating in other Member States where they are lawfully produced and marketed, of provisions laying down the requirements which those goods must comply with, even if those arrangements are applied without distinction to all goods (Cassis de Dijon, point 14-15)” 10 .

The Cassis de Dijon judgment introduced the principle of necessary requirements and the principle of mutual recognition of standards.

According to first of which a Member State, citing a valid and legitimate public interest, may impose certain restrictions on the free movement of goods originating in another Member State, provided that the conditions laid down in the Cassis de Dijon formula are met (no harmonisation of the Union, national measures are applied in a non-discriminatory manner, their introduction is necessary to protect the public interest, are proportionate, take into account the EU interest in the free movement of goods and it is the burden of proving that they meet the requirements specified).

The principle of mutual recognition of standards means that goods which have been legally manufactured in one Member State and authorised for sale in that Member State, shall be automatically admitted to trading in another Member State[11].

The ruling of the European Court of Justice on the Cassis de Dijon liqueur was a confirmation of the previous accounts contained primarily in the Commission Directive designated 70/50/EWG 12 , as well as on C-8/74 criminal (and civil) proceedings against Benoit and Gustave Dassonville: “recognising the possibility of differences between the national laws of the Member States and knowing that this may impede trade, The Court confirmed that Article 34 The TFEU may also include national measures which apply equally to domestic and imported goods’ 13 . In such situations, Member States may make exceptions, applying not only provisions Article 36 The TFEU, but also the principle of the necessary requirements.

Cassis de Dijon's ruling greatly affected the implementation of the free movement of goods. The Cassis de Dijon formula is an exception to the Dassonville formula, which is taken too widely, while in the exception introduced by the Cassis de Dijon formula, the conditions necessary for its application are too restrictive, and many measures still could not be justified in this way.

4. Formula Keck

The Cassis de Dijon formula, as well as the Dassonville formula, proved insufficiently effective in the case of national regulations, which, despite the slight impact on the movement of goods between Member States, could be classified as having a similar effect to quantitative restrictions. This led to a change in the position of the EU Court of Justice by ruling on cases C-267/91 and C-268/91, i.e. on criminal proceedings against Bernard Keck and Daniel Mithouard[14].

The case concerned two managers who, when resold at dumped prices, have broken national rules prohibiting the sale of products below the purchase price and are therefore subject to criminal proceedings.

Managers have raised the incompatibility of national legislation with European Union legislation, addressing the Court of Justice for a preliminary ruling.

The CJEU ruled that: ‘In contrast to the previous case law, the application to products originating in other Member States of national rules which restrict or prohibit certain sales, provided that only all economic operators active in the national territory are in force and concern, from a legal and factual point of view, the marketing of domestic products and products originating in other Member States, does not impede, directly or indirectly, or potentially, trade between Member States within the meaning of the judgment of 11 July 1974 on 8/74 Dassonville’ 15 .

The Keck formula divided the measures taken by the state into measures concerning the product (laws on weight, dimension, shape, labelling or labelling) and measures on sales rules (rules on the sale of goods, i.e. placing products on the market).

On the basis of the Keck formula, the Dassonville principle is excluded where the provisions relating to the sale of goods in the same way apply to all traders in the Member State concerned and treat domestic and imported products in the same way[16].

Such measures established by the State do not have a similar effect to quantitative restrictions and therefore Article 34 The TFEU will not apply in this case.

A contrario, on the basis of the Keck formula, a measure having equivalent effect to quantitative restrictions is any regulation of a Member State concerning the sale of goods to which all economic operators operating in the country concerned, affecting the market situation of domestic and imported products, placing these second in a worse position. Formula Keck regulates methods of placing goods on the market, so it regulates issues such as: where, when and who can sell and advertise goods. The doctrine divides the rules governing sales into standards:

• • time of sale;
• • the place of sale or the rightholder;
• • advertising[17].

The effect of the application of the Keck formula by the EUSEU is a group of judgments which are governed by the rules on the sale of goods in which they are mentioned four categories of cases for which Member States' regulations are not covered Article 34 TFEU:

• measures concerning the sales time of the product 18 :

• national measures concerning the place of sale of the goods or restrictions of their sellers 19 :
• measures concerning the terms and methods of product marketing 20 :
• national price measures[21].

There are also a number of controversial rulings of the TEU excluding the application of the Keck formula in the above cases, including the Gourmet International Products case 22 ; Deutscher Apothekerverband v. DocMorris and Jacques Waterval[23]. It is also possible that a national provision on sales rules also applies to the product, then the possibility of applying the Keck formula depends on assigning to a specific category based on the circumstances of the situation.[24].

1. Judgments in Commission v. Italy and Mickelsson in the context of Article 34 TFEU

On the basis of the judgment of the TEU, the Commission v Italy has redefined the concept of a measure having an effect equivalent to quantitative restrictions. According to the TEU, ‘any other measure preventing access to the market belongs to the same concept one from Member States of goods originating in other Member States’ 25 . This was subsequently confirmed in the judgment of the CJEU Commission v Mickelsson[26].

In its judgment, the Commission v. Italy established another criterion for assessing the compatibility of national legislation with Article 34 The TFEU is the criterion of "a barrier to market access".

This principle does not in any way restrict the Keck formula, but may constitute the adoption by the EU Court of Justice of the de minimis rule, which follows the sentence in the judgment as follows: ‘the prohibition on the use of goods in the territory of a Member State has a significant impact on the behaviour of consumers, which in turn affects the access of that product to the market of that Member State’ 27 .

The criterion presented in this way ("obstacles to market access") can be applied only to national legislation that does not apply to the goods themselves, as in these cases the formulas Dassonville and Cassis de Dijon apply, as well as the rules governing the placing of goods on the market (Keck)[28].

6. Summary

The definition of the concept of a measure having equivalent effect to quantitative restrictions in the case-law of the EU Court of Justice faces certain problems, resulting in a very rich set of judgments. From the formula Dassonville, which the concept of a measure having equivalent effect to quantitative restrictions defines too widely, to the extent that virtually any State action may constitute an infringement Article 34 TFEU.

The next important ruling was the Cassis de Dijon judgment, which, in addition to the introduction of the principle of mutual recognition, supplemented the Dassonville formula, introducing exceptions in the form of necessary requirements.

However, those rulings did not contribute to the reduction of incoming cases to the TEU concerning infringements by national measures Article 34 TFEU.

The legislators of the Member States faced too wide a definition of a measure having an effect equivalent to quantitative restrictions faced significant difficulties in shaping national rules governing trade.

Another attempt to narrow down the scope Article 34 The TFEU was a judgment in Keck and Mithouard. On the basis of this, the product and sales measures were distinguished. Formula Keck disables Article 34 The TFEU in respect of sales measures if (cumulatively) the conditions set out therein are met. At present, the Keck formula is increasingly ignored by the EU Court of Justice, although its use is often justified[29].

The latest developments, while modifying the scope of the Keck formula, have been expressed in the Commission v. Italy and Mickelsson cases.

On the basis of these, it is a question of the compatibility of the provision of national law with Article 34 The TFEU does not prevent access to the market in a country or restrict the use of the product.

The Court of Justice of the EU has so far failed to draw up criteria on the basis of which a universal definition of the concept of a measure having equivalent effect to quantitative restrictions would be established.

The TEU may, as a result of the gradual evolution of the case law, eventually find solutions that will enable the full implementation of the idea of free movement of goods within the internal market of the European Union.

Nevertheless, it seems that the study one a coherent definition of a measure having an effect equivalent to quantitative restrictions may prove impossible. The national rules of the Member States which regulate the movement of goods differently at national level are still in the way. The solution would be to regulate all these issues at the level of EU directives and regulations that would harmonise the internal market in a comprehensive way.

However, this is a challenge that may exceed the capacity of the EU institutions, as it is difficult to imagine that every possible aspect of the movement of goods is regulated at EU level. Account should be taken of the specificities of the internal market of each Member State and its evolution, customs and even cultural aspects.

However, the huge number of problems that the EU institutions would face is that the only way to protect the free movement of goods is to further develop the case law of the Court of Justice of the EU, which may then constitute a direction for ruling on similar matters. However, this is not an ideal solution, as it does not guarantee the applicant or the applicant a favourable solution for him and keeps this situation in doubt until it is issued.

____________________________