Article 28 EC and Contributions of the Keck Case

1. Introduction

Article 28 EC provides that “[q]uantitative restrictions on imports and all measures having equivalent effect [MEQRs] shall be prohibited between Member States.” This seemingly simple and straightforward provision became one of the most legislated provisions and until today, guidance is requested from the European Court of Justice (the ECJ, the Court) as to what this provision entails.

The purpose of this work is to discuss the contribution of Keck case towards the practice and approach in this area and analyse whether or not the Court’s guidance brought clarity and solved the problems posed by the previous Court’s judgments.

In doing so, the paper will briefly analyse the situations which Article 28 did not specifically cover and where the Court’s judicial interpretation was necessary. It will then briefly analyse the landmark Cassis de Dijon judgment and the risk of over-arching reach of Article 28 which application of these principles could entail. Then, the ECJ’s judgment in Keck will be analysed followed by a discussion on the problems faced by the courts with application of the Keck formulas.

The essay will conclude with the discussion of the alternative tests proposed by the Advocates General and the academic writers.

2. Application of Article 28 EC and cases prior to Keck

Article 28 applied smoothly to cases involving discrimination between the domestic producers and importers.^[1] The problems began to arise where the rules applied indifferently to the domestic producers and importers “but which nevertheless create[d] real barriers to the passage of products between Member States.”^[2]

This area became one of the largest areas delineated by the ECJ’s judicial interpretation. Cassis de Dijon,^[3] the landmark case in this area, became one of the most celebrated and talked about ECJ’s judgments. The facts of the case concerned a prohibition on importation of the French liqueur, which was lawfully produced and marketed in France, into Germany because it did not comply with the German rules on wine-spirit content for such beverages.

In this case, the ECJ held that the cross-border legislative differences pertaining to marketing of the products “must be accepted in so far as those provisions may be recognized as being necessary in order to satisfy mandatory requirements relating in particular to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defence of the consumer.”^[4] The alcohol-content prescription for the French liqueur was not held to satisfy any of such mandatory requirements and was therefore contrary to Article 28.

Although without a doubt Cassis was a breakthrough case, extending Article 28 application to indistinctly applicable national rules, the problem with its application was “that all rules that concern trade, directly or indirectly, could be said to affect the free movement of goods in various ways.”^[5]

Challenges under Article 28 were being raised in the increasing number of scenarios. In most of these cases, the importers found national rules burdensome and on this basis, brought proceedings regarding their legality under Article 28.^[6] The ECJ dismissed these attempts but quickly realised how burdensome it was to subject almost every trade-governing national legislation to the Article 28 scrutiny.

Weatherill observes that following the Cassis guidance “the Court had lost sight of the link between [Article 28…] and internal market building by pushing it too far in the direction of general review of national market regulation…”^[7] and that such “subjection of all measures of national market regulation to supervision under Community law was beginning to damage the image and legitimacy of the European Court.”^[8] Clearly, there was a need for a further guidance which would limit the application of Cassis principles. That’s what the Court attempted to do in Keck.

3. Keck and Mithouard test

The facts of the case^[9] concerned with French law prohibiting sale at a loss. Two managers of the French hypermarkets selling goods at a loss were criminally charged. The managers, Messrs Keck and Mithouard, raised an argument that such prohibition runs afoul of what now is Article 28.^[10] The facts (just as in Torfaen and Cinéthèque) offered a perfect matrix for the Court to draw a precedent distinction between Cassis-type situations and national measures falling outside Article 28.

The ECJ started by observing that the French law in question “is not designed to regulate trade in goods between Member States.”^[11] Notwithstanding that, the ECJ acknowledged that such national regulation might nevertheless create barriers to trade (by restricting the sales volumes) “in so far as it deprives traders of a method of sales promotion.”^[12] The crucial question is whether or not, such national regulation constitutes an MEQR within the meaning of Article 28.^[13]

In that regard, the Court observed the growing tendency of European businessmen invoking Article 28 every time Member States passed laws “whose effect is to limit their commercial freedom even where such rules are not aimed at products from other Member States…”^[14]

The Court then proceeded with delineating Cassis-type situations from the ones falling under Keck scenario. To the Court, distinction lied in the fact that Cassis-type cases dealt with “rules relating to the goods themselves […], in part because these rules would have to be satisfied by the importer in addition to any such provisions existing within his or her own State…”^[15]

Keck-type rules, on the other hand, regulated “selling arrangements” and would not constitute an MEQR “so long as those provisions apply to all relevant traders operating within the national territory and so long as they affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States.”^[16] On this basis, the Court upheld the French rule as not contradicting Article 28.^[17]

In summary, the Court’s position can be summarised as removing from the remit of Article 28 national regulations dealing with selling arrangements which “imposed an equal burden on all those seeking to market goods in a particular territory…” because such rules “did not impose extra costs on the importer, their purpose was not to regulate trade […], and they did not prevent access to the market.”^[18] Such rules, provided they equally affect the marketing of domestic and imported goods, do not constitute an MEQR.

Even in cases involving ‘selling arrangements’, the national rule may still constitute an MEQR depending on how it affects the domestic and importing producers. This is exemplified by de Agostini,^[19] which concerned Swedish bans on TV advertising.

Although the ECJ accepted that the measures in question concerned “selling arrangements”, such measures also needed to “affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States.”^[20] Continuing with this analysis, the ECJ found that “an outright [advertising] ban, applying in one Member State, of a type of promotion for a product which is lawfully sold there might have a greater impact on products from other Member States.”^[21]

4. Article 28 after Keck – the devil is in the wording

Although the intentions and logic of the Court is evident from its judgment in Keck, this precedent failed to solve all the problems and ambiguity surrounding the Court’s approach to dealing with MEQRs. The main “problem resides in ambiguity about the meaning of the term ‘selling arrangements.’”^[22]

The term is extremely uncertain. Possibly, the Court was constrained by the ‘marketing rules’ analysis it adopted in Cassis and staying with this line of thinking distinguished those from ‘selling arrangements’. But the Court failed to give any definition of the term. Although such analysis might have been appropriate for Keck (prohibition of resale at a loss is a selling arrangement) there are numerous scenarios where the distinction between ‘marketing rules’ and ‘selling arrangements’ is not so clear-cut, for example national rules prohibiting TV advertisement, restricting prize-draws in magazine publications and so on. It is not immediately apparent which category such rules shall fall into and in many cases (discussed below) the ECJ had to use common sense and then extrapolate it into either Cassis- or Keck-type formulas.

Craig and de Burca observe that ‘selling arrangements’ can further be sub-divided into static and dynamic selling arrangements – the former include “rules relating to the hours at which the shops may be open, the length of time for which people may work, or the type of premises in which certain goods may be sold” and the latter “include the ways in which a manufacturer chooses to market this specific product, through a certain form of advertising, free offers, and the like.”^[23]

The dynamic selling arrangements “may relate more closely to the definition of the product itself”^[24] which should bring these types of selling arrangements back into Cassis hemisphere. The possible regulations falling into this type of selling arrangements are various advertising restrictions.^[25]

The ECJ’s definition in Keck, however, does not make this distinction and considers all selling arrangements as falling outside Article 28.^[26] Thus, for example, the ECJ regarded limited advertising ban and prohibition on doorstep sales of silver jewellery as not falling within the remit of Article 28,^[27] although, as stated above, these provisions, on more thorough analysis, may be regarded as dynamic selling arrangements infringing Article 28 under the Cassis guidance.

The subsequent Court’s jurisprudence showed that the Court is struggling with Keck guidance. Rather than smoothly applying the rule, the Court embarked upon clarifying the Keck guidance (itself supposed to be a clarifying rule).

An important case in this regard is Familiapress,^[28] which concerned the Austrian publisher applying to Austrian court for an order to prohibit a German publisher from distributing publications containing crossword puzzles where the winners could receive money. Such money prizes were contrary to the Austrian law. The German publisher argued that such law contradicted what now is Article 28.

The ECJ stated that although the national regulation in questions concerns a selling arrangement, “in this case it bears on the actual content of the products, in so far as the competitions in question form an integral part of the magazine in which they appear.”^[29] The national regulation was therefore pronounces an MEQR (despite having a technical characteristics of a selling arrangement) because “the prohibition at issue impairs access of the product concerned to the market of the Member State of importation and consequently hinders free movement of goods.”^[30] Famialiapress is an eloquent example of the problems which will continue to face the Court and the national authorities applying the ECJ’s ‘selling arrangements’ test.

Another question left unanswered by Keck and which stems from the confusing terminology employed by the Court is whether “cases concerned with the use of products” shall fall within Article 28.^[31] There have been proposals to exclude those cases from the remit of Article 28,^[32] but this just serves to show how extremely confusing the Keck guidance is and how many possible scenarios it left unanswered.

5. The proposed solutions to uncertainties of Keck

What are the other proposals to uncertainties of Keck? One of these might be a proposal outlined by Advocate General Jacobs in Leclerc-Siplec. AG Jacobs proposes that the analysis should revolve around market access, with national measures substantially restricting it or dealing with “the goods themselves, as in Cassis-type cases” being contrary to Article 28^[33] and cases involving non-discriminatory selling arrangements being adjudicated against a number of factors, such as “the range of goods affected, the nature of the restriction, whether the impact was direct or indirect, and the extent to which other selling arrangements were available.”^[34] Although concentration on the market access seems to be a right approach, AG Jacobs failed to propose an alternative definition to ‘selling arrangements’ which already proved to be extremely problematic in the jurisprudence following Keck.

Although AG Jacobs’ proposals had not been taken on board by the judges in Leclerc-Siplec, “[t]he ECJ has, as seen from de Agostini and Heimsdienst, been willing to consider market access more seriously, and this has also been emphasized in other recent cases.”^[35] In doing so, the ECJ undertook the analysis of whether or not effects of the national rules are the same for the importers as for the domestic producers.^[36]

The second approach was outlined by Advocate General Maduro in Alfa Vita.^[37] Advocate General acknowledged the uncertain nature of guidelines set out in Keck and proposed a three-step filter-like test whereby “[f]irst, discriminatory provisions, whether direct or indirect, were prohibited. Secondly, the imposition of supplementary costs on cross-border activity had to be justified. […] Thirdly, ‘any measure which impedes to a greater extent the access to the market and the putting into circulation of products from other Member States is considered to be a measure having equivalent effect within the meaning of Article 28 EC.”^[38]

The great advantage of this proposal is that it operated with well-established and easily understood concepts of market access, ‘cross-border activity’ and direct or indirect discrimination. Market access, in the general sense, is allowing cross-border access to producers and increasing the choice of consumers.^[39]

Maduro’s test also takes out from the definition the term ‘selling arrangements’ which created a lot of confusion in the Keck guidance. It seems to be the most sensible approach for the ECJ in future cases.

Academically, there is an ongoing argument whether the analysis of Article 28 should revolve around the legal concepts, such as principles of fairness and legality, or whether economic considerations, such as market access should prevail.^[40] The leading commentators seem to agree on the necessity of the market access approach.^[41] For example, Barnard states that “[n]on-discriminatory measures which directly and substantially impede access to the market (including the extreme case of preventing access to the market altogether)”^[42] shall be caught by Article 28.

Further, also getting around the confusing ‘selling arrangements’ terminology, Barnard offers to exclude from Article 28 remit “non-discriminatory measures which do not substantially hinder access to the market”.^[43] This test is much more flexible – for example, advertising restrictions and opening hours restrictions can either fall within or outside Article 28 depending on the “substantiality” of their inter-State trade limitations.^[44] This will obviate the need for somewhat artificial distinctions, attached to the ‘selling arrangements’ terminology, the ECJ came with in advertising ban cases such as Leclerc-Siplec and de Agostini.

6. Conclusion

The ECJ has extensively dealt in its jurisprudence with indistinctly applicable rules constituting MEQRs. The initial breakthrough in Cassis de Dijon proved to put national trade laws and regulations under too much EU law scrutiny and was misused by importers unhappy with any national regulations which they were not subjected to in their home countries. This was a completely wrong approach to Article 28 and necessitated further guidance from the ECJ.

The Court attempted to provide this clarifying guidance in Keck. The guidance, however, proved to be extremely vague. The main problem was the term ‘selling arrangements’ which the ECJ failed to define and which led to a lot of confusion in practice. The Court evidently struggled with applying its own guidance in subsequent cases and with deciding whether or not various national regulations constituted ‘selling arrangements’.

There is a growing judicial and academic support towards passing of a new test which would operate with the economic principle of market access. This is a much more straightforward term capable of delineating clearly which instances will fall under Article 28 and which will be outside the scope of the prohibition. The ECJ also seems to go in this directly and “has more recently subtly shifted its position, according greater status to market access in its own right.”^[45]

Bibliography

1. Paul Craig and Grainne de Burca, EU Law: Text, Cases and Materials, 4^th ed., Oxford, New York: Oxford University Press, 2008;

2. S. Weatherill, ‘After Keck: Some Thoughts on how to Clarify the Clarification’ (1996) 33 CMLRev. 885;

3. C. Barnard, ‘Fitting the Remaining Pieces into the Goods and Persons Jigsaw’ (2001) 26 ELRev. 35, 52

Table of Cases

1. Cases C-267 and 268/91, Criminal Proceedings against Keck and Mithouard [1993] ECR I-6097, at www.ena.lu;

3. Case 286/81 Oosthoek’s Uitgeversmaatschappij BV [1982] ECR 4575;

4. Case C-292/92, R. Hunermund v. Landesapothekerkammer Baden-Württemberg [1993] ECR I-6787;

5. Case C-412/93, Société d’Importation Edouard Leclerc-Siplec v. TFI Publicité SA [1995] ECR I-179;

6. Case C-441/04, A-Punkt Schmuckhandels GmbH v. Schmidt [2006] ECR I-2093;

7. Case 368/95, Vereinigte Famialiapress Zeitungsverlags- und vertriebs GmbH v. Heinrich Bauer Verlag [1997] ECR I-3689;

8. Cases C-34, 35 and 36/95, Konsumentombudsmannen v. De Agostini (Svenska) Förlag AB and TV-Shop i Sverige AB [1997] ECR I-3843;

9. Case C-405/98, Konsumentombudsmannen v. Gourmet International Products AB [2001] ECR I-1795;

10. Case C-322/01, Deutscher Apothekerverband v. 0800 Doc Morris NV and Jacques Waterval [2003] ECR I-14887;

12. Case C-416/00, Morellato v. Commune di Padova [2003] ECR I-9343;

13. Case C-98/01, Commission v. United Kingdom and Northern Ireland [2003] ECR I-4641;

14. Case 249/81, Commission v. Ireland [1982] ECR 4005;

15. Case 120/78, Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein [1979] ECR 649;

16. Case 145/88, Torfaen BC v. B & Q plc [1989] ECR 3851;

17. Cases 60 and 61/84, Cinéthèque SA v. Fédération Nationale des Cinémas Français [1985] ECR 2605

1

Footnotes

^[1] See, eg, Case 249/81, Commission v. Ireland [1982] ECR 4005.

^[2] Paul Craig and Grainne de Burca, EU Law: Text, Cases and Materials, 4^th ed., Oxford, New York: Oxford University Press, 2008, p 677.

^[3] Case 120/78, Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein [1979] ECR 649.

^[4] Para. 8.

^[5] Craig and de Burca, p 681.

^[6] See, eg, Case 145/88, Torfaen BC v. B & Q plc [1989] ECR 3851 and Cases 60 and 61/84, Cinéthèque SA v. Fédération Nationale des Cinémas Français [1985] ECR 2605.

^[7] S. Weatherill, ‘After Keck: Some Thoughts on how to Clarify the Clarification’ (1996) 33 CMLRev. 885, 896-897, 904-906, in Craig and de Burca, p 693.

^[8] Id.

^[9] Cases C-267 and 268/91, Criminal Proceedings against Keck and Mithouard [1993] ECR I-6097, at www.ena.lu.

^[10] Para. 3.

^[11] Para. 12.

^[12] Para. 13.

^[13] Para. 13.

^[14] Para. 14.

^[15] Craig and de Burca, p 685.

^[16] Para. 16.

^[17] Para. 18.

^[18] Craig and de Burca, p 685.

^[19] Cases C-34, 35 and 36/95, Konsumentombudsmannen v. De Agostini (Svenska) Förlag AB and TV-Shop I Sverige AB [1997] ECR I-3843.

^[20] Para. 40.

^[21] Para. 42.

^[22] Craig and de Burca, p 686.

^[23] p 686.

^[24] Craig and de Burca, p 686, referring to Case 286/81 Oosthoek’s Uitgeversmaatschappij BV [1982] ECR 4575 and other cases.

^[25] Id.

^[26] Craig and de Burca, pp 686-687.

^[27] Craig and de Burca, p 687, referring to Case C-292/92, R. Hunermund v. Landesapothekerkammer Baden-Württemberg [1993] ECR I-6787, Case C-412/93, Société d’Importation Edouard Leclerc-Siplec v. TFI Publicité SA [1995] ECR I-179 and Case C-441/04, A-Punkt Schmuckhandels GmbH v. Schmidt [2006] ECR I-2093.

^[28] Case 368/95, Vereinigte Famialiapress Zeitungsverlags- und vertriebs GmbH v. Heinrich Bauer Verlag [1997] ECR I-3689.

^[29] Para. 11.

^[30] Para. 12.

^[31] Craig and de Burca, p 688.

^[32] Craig and de Burca, p 688 referring to AG Kokott in Case C-142/05, Åklagaren v. Mickelsson and Roos, 14 Dec. 2006.

^[33] Craig and de Burca, p 691.

^[34] Id.

^[35] Id, referring to Case C-416/00, Morellato v. Commune di Padova [2003] ECR I-9343 and Case C-98/01, Commission v. United Kingdom and Northern Ireland [2003] ECR I-4641.

^[36] Craig and de Burca, p 691.

^[37] Cases C-158 and 159/04, Alfa Vita Vassilopoulos AE and Carrefour Marinopoulos AE v. Elliniko Dimosio and Nomarchiaki Aftodioikisi Ioanninon [2006] ECR I-8135, in Craig and de Burca, p 692.

^[38] Craig and de Burca, p 692, citing AG Maduro in Alfa Vita, para. 45.

^[39] Craig and de Burca, p 694.

^[40] Craig and de Burca, p 692.

^[41] See, eg, Weatherill.

^[42] C. Barnard, ‘Fitting the Remaining Pieces into the Goods and Persons Jigsaw’ (2001) 26 ELRev. 35, 52 in Craig and de Burca, p 693.

^[43] Barnard.

^[44] Barnard.

^[45] Craig and de Burca, p 694.