EU Import Restrictions - Germany Cheese Laws

Cheese Trading in Europe Importation Restrictions

The European Community has attempted to remove barriers to trade between Member Estates, and to that effect has enacted provisions within the Treaty of the Functioning of the European Union 1958 (TFEU). Article 34^[1] prohibits quantitative restrictions and any measures having the equivalent effects to a quantitative restriction on imports. CowsRUs can rely on this provision to challenge German laws.

Law imposing a vetting by the German Cheese Controllers (GCC)

Any measure which imposes a total or partial ban or a quota on imports is a quantitative restriction^[2]. This is not the case of the vetting law as the vetting imposed does not amount to a total ban, but is likely to deter, or at the very least, hinder CowsRUs from exporting cheese to Germany, as without the approval of the German Cheese Controller, German laws ban this kind of products from entering Germany. And even if CowsRUs are able to obtain the approval of the GCC, the vetting process seems rather lengthy and complex. Therefore, the law could potentially deter either directly or indirectly, any trade between the UK and Germany^[3], therefore, it is a measure having equivalent effect (MEQR), even if the hindrance is slight.^[4]

The law is concerned with the way the goods are produced, that is the goods themselves, as opposed to regulating their selling arrangement; therefore the Keck proviso,^[5] which excludes selling arrangements from the scope of Article 34^[6] does not apply.

Where national law applies to imported products as well as domestic, and in the absence of EU law standards relating to the products, difficulties may arise as different Member States will have different rules. However, these can only be accepted if the national law, which causes the hindrance is necessary to satisfy a mandatory requirement and the law is proportionate and goes no further than is necessary to achieve a particular aim. This is the first principle in Cassis de Dijon,^[7] known as the rule of reason.

The law seems to apply indistinctively to producers from any Member State who wish to import cheese into Germany. This means that neither UK products nor European products can be sold in Germany without the vetting from the association. This suggests the absence of direct discrimination in regards to nationality against the imported product. Yet, as local producers may be better prepared to comply with the local laws as opposed to producers of other Member States who will have to spend more time and money getting ready for the vetting to satisfy the German Checkers, this may potential amount to indirect discrimination.

There is a presumption that products lawfully manufactured in one Member State ought to be marketable in another, in the event that a Member State has a law to prevent this, it is up to that Member State to rebut that presumption on the basis of both Cassis de Dijon ^[8] or Article 36^[9] derogations. This is the second principle in Cassis de Dijon,^[10] known as mutual recognition

Here, HealthyWhiteStuff produced by CowsRUs comply with the consumer regulatory requirements of the UK relating to dairy products produced from humanely reared cows. If an EU provision exists to harmonise these requirements, this will prevail and German laws will have no effect, therefore CowsRUs will not need to recourse to Article 34^[11]; however there is no evidence on the facts that such law exists. In the absence of any EU law regulating such requirements, Germany will be unable to contest that the law is not covered by the article and is not a MEQR.

However, Germany may be able to justify the law under the first Cassis^[12] principle (rule of reason) as the law applies indistinctively to local as well as other EU producers of cheese. To be successful, Germany will have to evidence that the law is necessary to fulfil a mandatory requirement, as well as proportionate to the aim they attempt to achieve. Here, the German law appears to aim at protecting the public health, and therefore Germany may argue that it is a compulsory requirement and indeed in proportion to such aim, as lack of compliance to the law would potentially put the health of the whole population at risk.

Germany could invoke the derogations of Article 36^[13] to claim that health is the policy aim, as the law has the objective of safeguarding human as well as animal health by making it illegal to trade produce which is not produced according to this objective. Germany will bear the burden of proving the existence of a real health risk.^[14] Further, evidence will also have to be produced to prove that the law does not discriminate arbitrarily, or is in any way a restriction on trade, and that is proportionate.

CowsRUs could potentially counter argue that the objective to be achieved by the German law could be achieved as effectively by better labelling the cheese when sold in Germany, or even producing documents from the UK consumer regulatory boards to evidence how the cows have been kept and reared and the methods of production CowsRUs uses to make the cheese. CowsRUs can also argue their case against the law by relying on the second Cassis principle (mutual recognition) and state that as it is lawful to sell their cheese in the UK, then, prima facie, they should also be able to sell it legally in in all Member States.

On balance, and although Germany may be able to rely on article 36^[15] or Cassis de Dijon^[16] to justify their law, CowsRUs will be able to successfully challenge the German law under Article 34^[17]. In which case, CowsRUs could ignore the law and start the process of exporting their products.

Law requiring change of name

This law does not constitute a quota or a total ban, therefore it is not a quantitative restriction. However, the required change of name of their award winning cheese means that all advertising material and packaging will have to be re-made. The cost of this and time which will take as well as the loss of competitive advantage caused by changing the name the cheese is famous for to something consumers may not recognise, needing to be established again in the market, has the effect of hindering directly, either actually or potentially, the trade of these products between Germany and UK,^[18] as this may deter or even prevent CowsRUs to sell the cheese in Germany, making this law a MEQR under Dassonville.^[19]

The law clearly concerns the goods, their name to be precise, instead of a selling arrangement. Therefore, the Keck proviso ^[20] is unable to save it from being an MEQR.

The law prohibits producers from using words to imply anything related to fitness and health when naming products. As this seems to apply only to foreign traders, and as a consequence only to imported products, the law is a distinctly applicable MEQR, meaning that CowsRUs will be in a particularly disadvantageous position in comparison with local producers, due to the lengthy and expensive process they have to go through to comply with the German law to put their product in the German market.

Germany will be unable to justify the law under the first principle in Cassis^[21] (rule of reason) as the MEQR applies only to foreign traders, and therefore is distinctly applicable. So their only hope is Article 36^[22], if they can prove a reasonable justification for it, which is in this case, is public health.

Germany will need to prove that the law does not amount to arbitrary discrimination or is an attempt to disguise a restriction on trade, as well as the fact that is proportionate. On the facts, Germany will be unsuccessful, as CowsRUs can easily argue that the protection of public health aim of the law could be achieved as effectively with clear and detailed label to indicate the nutritional content and health risks of the cheese, enabling the consumers to make a better informed choice and thereby, complying with the aim of the law. In addition, CowsRUs will also be successful in arguing that, as the cheese is lawfully sold in the UK then, prima facie, it should be allowed to be sold in other Member States, under the second Cassis de Dijon ^[23] principle of mutual recognition.

In conclusion, CowsRUs have a strong case when challenging this law under Article 34^[24], despite of Germany’s attempts of justifying it under under Article 36^[25], therefore CowsRUs can ignore the law.

TV advertising campaign

The law forbids the advertising of cheese on TV before 9pm. This puts CowsRUs’s product in difficulty to penetrate the German market, potentially having a negative impact on sales, and consequently on imports. Therefore, the law is capable of directly, or at the very least indirectly, deterring potentially trade between the two countries, and is an MEQR under Dassonville.^[26]

However, in this case, rather than the goods themselves, the law appears to be concerned with the way they are sold as it regulates the circumstances under which the products are marketed and advertised.^[27]

Prima facie, therefore, the law appears to be a selling arrangement, as it does not fulfil the characteristics of a MEQR, therefore falling outside the scope of Article 34,^[28] if the laws apply to all affected traders operating within the national territory and the laws affect in the same manner, in law and in fact the marketing of domestic products and of those from other member estates.^[29]

The law seems to apply to all affected traders, either foreign or local, operating within the German territory, thus satisfying the first criterion of the Keck^[30] proviso. However, CowsRUs could argue that the effect of the law on the marketing of products of other Member States is not, in law and in fact, the same. CowsRUs can argue with some degree of success, that because they are not yet established in Germany, a TV campaign is the only way they can penetrate the German market with their product, and by not allowing TV advertisement after 9pm the law significantly restricts their ability to establish their products in the German market, affecting them disproportionately harsher than local traders.^[31]

Thus, the law does not have equal affect on domestic and foreign products, the second criterion of the Keck^[32] proviso is not satisfied, it discriminates on the grounds of nationality against foreign traders and puts them at a disadvantage.^[33] Consequently, the law is capable of being an MEQR, even if it is only concerned with selling arrangements rather than the goods themselves, falling within the ambit of Article 34^[34].

Nothwidstanding its restrictive effect, the law is indistinctly applicable as it applies to domestic and imported goods in the same manner. The effect of this is that neither local nor foreign producers can lawfully promote their cheeses on TV before 9pm.

As the law is indistinctly applicable Germany can rely on the first Cassis de Dijon^[35] principle of rule of reason to justify it, provided they can evidence that it is needed to fulfil a mandatory requirement and that it is proportionate to that requirement. Here, the purpose of the law is the protection of public health, mainly of children, which seems to be a mandatory requirement. In order to assess its proportionality, the adverse impact of such advertising campaigns on the eating habits of children and consequently, their health, must be contrasted against the potential adverse financial impact on all cheese producers. It seems clear that making such advertising unlawful before 9pm it is indeed proportionate when achieving this aim.

Alternatively, Germany could claim that by declaring the TV advertisement of unhealthy products before 9pm, their law is safeguarding human life and health, of children in particular, thus relying on the derogations of Article 36.^[36] To be successful, Germany will bear the burden of proving the existence of a real health risk.^[37] Further, Germany must provide evidence to prove that the law is not discriminating arbitrarily, or disguising a restriction on trade^[38] and that it is proportionate.^[39]

In conclusion, although CowsRUs has a good argument to challenge this law under Article 34^[40], Germany is likely to succeed on the basis of both Cassis de Dijon^[41] or Article 36^[42] derogations will be able to justify the law.

Footnotes

^[1] Treaty of the Functioning of the European Union 1958.

^[2] Case 2/73 Geddo v Ente Nazionale Risi [1973] ECR 865; [1974] 1 CMLR 13.

^[3] Case 8/74 Procureur du Roi v Dassonville [1974] ECR 837; [1974] 2 CMLR 436; [1975] FSR 191.

^[4] Case 177 & 178/82 Criminal Proceedings against Jan Van der Haar [1984] ECR 1797.

^[5] Case C-267/91 Criminal Proceedings against Keck [1993] ECR I-6097; [1995] 1 CMLR 101; Times November 25 1993; Financial Times November 30 1993.

^[6] Consolidated Version of the Treaty of the Functioning of the European Union [2010] OJ C326.

^[7] Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung fur Branntwein [1979] ECR 649; [1979] 3 CMLR 494.

^[8] Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung fur Branntwein [1979] ECR 649; [1979] 3 CMLR 494.

^[9] Consolidated Version of the Treaty of the Functioning of the European Union [2010] OJ C326.

^[10] Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung fur Branntwein [1979] ECR 649; [1979] 3 CMLR 494.

^[11] Consolidated Version of the Treaty of the Functioning of the European Union [2010] OJ C326.

^[12] Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung fur Branntwein [1979] ECR 649; [1979] 3 CMLR 494.

^[13] Consolidated Version of the Treaty of the Functioning of the European Union [2010] OJ C326.

^[14] Case 124/81 Commission of the European Communities v United Kingdom [1983] ECR 203; [1983] 2 CMLR 1; Times July 26 1982.

^[15] Consolidated Version of the Treaty of the Functioning of the European Union [2010] OJ C326.

^[16] Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung fur Branntwein [1979] ECR 649; [1979] 3 CMLR 494.

^[17] Consolidated Version of the Treaty of the Functioning of the European Union [2010] OJ C326.

^[18] Case 8/74 Procureur du Roi v Dassonville [1974] ECR 837; [1974] 2 CMLR 436; [1975] FSR 191.

^[19] Ibid.

^[20] Case C-267/91 Criminal Proceedings against Keck [1993] ECR I-6097; [1995] 1 CMLR 101; Times November 25 1993; Financial Times November 30 1993.

^[21] Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung fur Branntwein [1979] ECR 649; [1979] 3 CMLR 494.

^[22] Consolidated Version of the Treaty of the Functioning of the European Union [2010] OJ C326.

^[23] Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung fur Branntwein [1979] ECR 649; [1979] 3 CMLR 494.

^[24] Ibid.

^[25] Ibid.

^[26] Case 8/74 Procureur du Roi v Dassonville [1974] ECR 837; [1974] 2 CMLR 436; [1975] FSR 191.

^[27] Case C-292/92 Hunermund v. Landesapothekerkammer [1993] ECR I-6787; Case C412/93 Societe d’Importation Edouard Leclerc-Siplec v TF1 Publicite SA [1995] ECR. I-179; [1995] 3 CMLR 422; [1995] All ER (EC) 343; [1996] EMLR 193; Financial Times February 14 1995.

^[28] Consolidated Version of the Treaty of the Functioning of the European Union [2010] OJ C326.

^[29] Case C-267/91 Criminal Proceedings against Keck [1993] ECR I-6097; [1995] 1 CMLR 101; Times November 25 1993; Financial Times November 30 1993.

^[30] Ibid.

^[31] Joined Cases C-34/95, C-35/95 and C-36/95) Konsumentombudsmannen (KO) v De Agostini (Svenska) Forlag AB; Konsumentombudsmannen (KO) v TV-Shop I Sverige AB [1997] ECR I-3843; [1998] 1 CMLR 32; [1997] All ER (EC) 687; [1998] ETMR 44; [1998] EMLR 43; [1997-98] Info TLR 264.

^[32] Case C-267/91 Criminal Proceedings against Keck [1993] ECR I-6097; [1995] 1 CMLR 101; Times November 25 1993; Financial Times November 30 1993.

^[33] Case C-405/98 Konsumentombudsmannen (KO) v Gourmet International Products AB [2001] ECR I-1795; [2001] 2 CMLR 31; [2001] All ER (EC) 308; [2001] CEC 98 .

^[34] Consolidated Version of the Treaty of the Functioning of the European Union [2010] OJ C326.

^[35] Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung fur Branntwein [1979] ECR 649; [1979] 3 CMLR 494.

^[36] Consolidated Version of the Treaty of the Functioning of the European Union [2010] OJ C326.

^[37] Case 124/81 Commission of the European Communities v United Kingdom [1983] ECR 203; [1983] 2 CMLR 1; Times July 26 1982.

^[38] Case C-40/82 Commission of the European Communities v United Kingdom [1982] ECR 2793; [1982] 3 CMLR 497.

^[39] Case C-302/86 Commission of the European Communities v Denmark [1988] ECR 4607; [1989] 1 CMLR 619; Times October 3 1988; Case C-60/84 & C-61/84 Cinetheque SA v Federation Nationale des Cinemas Francais; [1985] ECR 2065; [1985] ECR 2605; [1986] 1 CMLR 365.

^[40] Consolidated Version of the Treaty of the Functioning of the European Union [2010] OJ C326.

^[41] Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung fur Branntwein [1979] ECR 649; [1979] 3 CMLR 494.

^[42] Ibid.