The CJEU’s reasoning in Keck is unsatisfactory
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The CJEU’s reasoning – although not the result – in Keck is unsatisfactory for two reasons. First, it is inappropriate to make rigid distinctions between different categories of rules, and to apply different tests depending on the category to which particular rules belong. Secondly, the exclusion from the scope of Article [34 TFEU] of measures which “affect in the same manner, in law and in fact, the marketing of domestic products and those from other Member States” amounts to introducing, in relation to restrictions on selling arrangements, a test of discrimination. That test, however, seems inappropriate.” Discuss this statement.
Date authored: 03 rd September, 2014.
Introduction
The decision of Keck[1] concerns the interpretation of Article 34 of the Treaty on the Functioning of the European Union (TFEU) [2] which is in turn concerned with removing any obstacles to inter-state trade within the EU. In aiming to foster the free movement of goods, this provision shares with numerous others the objective of creating a single, pan-European common market: a foundation of the Community-establishing Treat of Rome 1957 [3]. Keck’s interpretation of Article 34 and its contribution to this wider objective has been the subject of much debate. Here, after a brief summary of the key jurisprudence of the Court of Justice of the European Union (CJEU) leading up to Keck, the specific criticisms made in the given statement – regarding the “rigid distinctions” and “test of discrimination…in relation to restrictions on selling arrangements” to which Keck gave rise – will be discussed. It shall be seen that while both criticisms hold water, they can and have also been countered on various levels, with the conclusion that Keck in fact had an overall positive influence on the law within the area.
Summary of Article 34 jurisprudence leading to Keck
As mentioned above, Article 34’s direct purpose is to foster the free movement of goods by removing any obstacles to inter-state trade, reading: “Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States”. Although the concept of quantitative restrictions is not defined, here it simply means a limitation on the number of goods that can be imported by member states. As regards “measures having an equivalent effect” to quantitative restrictions on imports, again there is no formal definition, however in Dassonville the CJEU propounded a formula widely used since, that all rules within the EU “ capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be considered as measures having an effect equivalent to a quantitative restriction” .[4] Ultimately, Dassonville paved the way for the landmark case of Cassis de Dijon [5] which confirmed that as well as discriminatory measures, Article 34 also captures non-discriminatory measures. The rationale given by the court for expanding Article 34’s scope was that of “disparities between the national laws” of member states. [6] They reasoned that where imported products had to comply with regulations in both their home state and the state to which they exported this represented a disadvantage amounting to an obstruction to inter-state trade. Practically speaking, this distinction meant that regulations which required goods to be altered at the production or designing stage would normally be considered ‘dual burden rules’ whereas regulations concerning how the goods are sold would generally be ‘equal burden rules’, and Cassis suggested that only the latter would be excluded from the scope of Article 34.
Following Cassis, a number of issues came to the court, and while the CJEU generally adhered to the Cassis analysis as understood above [7], in several cases it did not.[8] One important example of the latter is the case of Torfaen Borough Council, [9] where the CJEU held that rules restricting shops from opening on Sunday could potentially be prohibited under Article 34, even though such a measure would clearly be an equal burden rule. Due to this such cases, and ultimately the divergence between these decisions and those found on the basis of the dual/equal burden distinction[10], many became concerned that the breadth of the Cassis test was too wide, that it was being abused, and effectively being utilised simply to protect the commercial freedom of traders rather than preclude obstacles to intra-community trade as such. [11] Keck attempted to rectify[12] this by explicitly propounding a further distinction between so called ‘product rules’ “such as those relating to designation, form, size, weight, composition, presentation, labelling, packaging” which it deemed to be prohibited by Article 34 and “selling arrangements” which it deemed prima facie would not. [13]
The distinction between ‘product rules’ and ‘selling arrangements’
The appropriateness of the distinction between ‘product rules’ and ‘selling arrangements’ is what the given statement calls into question., and this can only be assessed on the basis of its practical efficacy. In many cases the Keck distinction has been a success, dealing with complaints cogently. In Dinamic Medien[14], where the court held a rule in Germany placing restrictions on the sale of image storage media to young persons via mail order unless they had been reviewed as suitable and obtained a sticker to certified this was a ‘product rule’. They thus held it was prohibited by Article 34, reasoning that because it was a packaging requirement and also due to the fact imported goods of this nature would have to undergo a similar examination process in their home state such goods would be the subject of a dual burden. Similarly successful was Keck’s use in Familiapress [15], where an Austrian rule which precluded the sale of magazines containing prize competitions was argued to fall within Article 34. Despite the argument that the prize was simply a selling arrangement, the CJEU contended that it would require changes to made to the product itself and therefore impose a dual burden on imports, notwithstanding the fact the rule was not directly discriminatory.
However the problems with Keck can be seen where a rule does not seem to fit comfortable into either ‘rigid’ category. The case of Morellato [16] concerned a rule imposing a requirement that ‘bake-off bread’ (partially-baked bread, which needed a final cooking period before sale) be packaged and labelled before sale. As this requirement was binding prior to the sale, it was evidently not a selling arrangement. Nevertheless, the court found that the rule was not prohibited by Article 34 on the basis that it simply was not a product rule, due to the product itself not needing to be altered before the sale. Similarly, but resulting in a different conclusion, was the case of Alfa Vita. [17] Also involving bake-off bread, the rule under discussion here required the product to be prepared only in traditional bread making environments (including facilities redundant to the specific process such as a flour store and kneading equipment). Despite the fact that the restriction of the sale of a product to a specific environment is an archetypal selling arrangement, [18] the court found this to fall outside of Article 34 on the basis of it clearly not being a product rule, requiring the product to be altered in substance.
This shows that the assertion in the above statement is at least to some extent accurate. While the outcome of both Morellato and Alfa Vita is intuitively correct in terms of not preventing obstacles to inter-state trade, the court’s judgements and reasoning were effectively shoehorned into the Keck distinctions in a way not envisaged in the initial articulation. Many have criticised Keck [19] in these terms and ultimately claimed the distinction between the rules to be overly formalistic, too little attention paid to the effect of rules and too much to their form. This argument certainly has some traction, although it perhaps neglects to appreciate the fact that the distinctions, while formal, are premised on conclusions concerning the effect of rules.
The ‘Keck proviso’
The second part of the given statement refers to a section of the Keck formulation exclusively concerning selling arrangements, often referred to as the ‘Keck proviso’. This condition qualifies the presumption that selling arrangements should fall outside of Article 34’s scope by stating that this should be the case only providing that “ those provisions…affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States”
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This condition effectively “amounts to introducing, in relation to restrictions on selling arrangements, a test of discrimination” as per the essay statement under analysis. In itself, this would not be a big development considering discriminatory measures are a priori captured in any case; however by stating “in fact” Keck propounds a wider test of indirect discrimination as regards selling arrangements.
The necessary investigations into fact resulting from the Keck proviso mean that often, the CJEU will defer to the national court after making an initial determination of whether or not a provision may fall within Article 34 should evidence be found. [20] Where the court considers itself to have a sufficient amount of market knowledge, it has decided on questions of fact, finding selling arrangements to fall within Article 34 by virtue of the Keck proviso. [21] In many cases however, a selling arrangement will be intrinsically discriminatory and will require little investigation by the court; such as cases where there is a restriction imposed on sales based on proximity, as other Member States will automatically be at a disadvantage. [22]
Whether the Keck proviso is ‘inappropriate’ as contended in the essay statement is unclear. Clearly, there are situations where selling arrangements rightfully fall within Article 34 and it makes good sense for this to be provisioned for. On the other hand, Advocate-General Jacobs, in his Opinion in case Leclerc-Siplec [23], opines that the element of discrimination, as reintroduced by Keck, is irrelevant because if a rule “hinders inter-state trade” it does so regardless of its effect on domestic trade. The issue with this is that hindrance to inter-state trade, as Jacobs refers to it, is difficult to define, this being the reason for some of the difficulties giving rise to Keck: that is, individuals using Article 34 to protect their commercial freedom as traders. Jacobs furthermore claims that irrespective of discrimination, selling arrangements will often have an effect on intra-community trade and that the difference between them and product rules was one of degree, not substance, dismissing the efficacy of the ‘rigid distinction’ approach. He thus proposes a test of“substantial hindrance to market access” [24]. This concept started to gain a following in the academic world, [25] and over time began emerging as a term in a number of cases in the area, culminating in the Motorcycle Trailers Case. [26] Rather than replacing the tests of Keck, Cassis and Frankovic, through the Motorcycles case the CJEU appeared to merely supplement them with the following: “any other measure which hinders access of products originating in other Member States to the market of a Member State is also covered by that concept” .[27] The notion of market access, while approved of by many has been unequivocally and comprehensively rejected as an improvement by others, Snell arguing that it adds nothing to the existing framework, collapsing to encapsulate either economic freedom or anti-discrimination. [28] The fact Bernard, in supporting the notion of market access, even goes so far as to concede measures such as “extreme limits on opening hours may well substantially hinder access to the market and so should breach [Article 34)”, illustrates the danger that the concept effectively takes the law back to pre-Keck days where Article 34 is effectively used to protect commercial freedom. [29]
Conclusion
Through the above analysis, it can be seen that while the given statement makes general criticisms of Keck that can be substantiated from one perspective, upon deeper evaluation, it is by no means a certainty that Keck’s tests are inappropriate. While its distinctions and proviso leave something to be desired and thus room for development, they represented a significant step forward in making the CJEU’s analysis and reasoning more cogent, if not drastically changing the likely outcomes of specific cases.
Bibliography
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Cases
Joined Case C-267, 268-91, Keck and Mithouard [1993] ECR I-6097
Case 8/74, Dassonville [1974] ECR 837
Case 120/78, Rewe-Zentrale AG v. Bundesmonopolverwaltung fur Branntwein [1979] ECR 649 (‘Cassis de Dijon’)
Case 75/81, Blesgen [1982] ECR 1211
Case C-23/89, Quietlynn [1990] ECR I-3059
Joined cases 60 and 61/84, Cinetheque [1985] ECR 2605
C-145/88, Torfaen Borough Council v B&Q plc [1989] ECR 3851
Opinion of Advocate-General Tesauro in case C-292/92 Hunermund [1993] ECR I-6787 Paragraphs 25-28
Case C-244/06, Dynamic Medien [2008] ECR I-505
Case C-368/95, Familiapress [1997] I-3689
Case C-368/95, Familiapress [1997] I-3689
Joined cases C-158 and 159/04 Alfa Vita [2006] ECR I-8135
C-391/92, Commission v Greece (“Infant milkaˆY) [1995] ECR I-1621
Joined cases C-34,35 & 36/95 De Agostini [1997] ECR I-3843
Case C-405/98, Gourmet International Products [2001] ECR I-1795
Commission v. Germany (Hospital Medical Supplies) [2008] ECR I-6935
Case C-322/01 DocMorris [2003] ECR I-14887
C-412/93 Leclerc-Siplec ([1995] ECR I-179
Opinion of AG Kokott in case C-142/05 Mickelsson and Roos [2009] ECR I-4273
