Keck In Capital? Redefining 'Restrictions' In The 'Golden Shares ...

2 Selling Arrangements and Market Access in the Free Movement of Goods

2.1 The Pre-Keck Case Law on MEEQRs

The establishment and development of the European Union’s (EU) Internal Market has been to a large extent supported and promoted by the dynamics of negative integration. It was the Luxembourg Court that stepped in and took the lead in overcoming the political stagnation of the 1960s/1970s and facilitating the process of economic integration. With the two landmark decisions in Dassonville 5x Case 8-74, Dassonville, [1974] ECR 00837. and Cassis de Dijon,6x Case 120/78 Cassis de Dijon, [1979] ECR 00649. the Court unleashed the powers of negative integration and inaugurated a new era, where any national rule capable of hindering, directly or indirectly, actually or potentially, intra-Community trade could be regarded as an MEEQR.7x Case 8-74, Dassonville, at 5. The principle of mutual recognition was proclaimed as the predominant criterion for determining whether a trade restriction existed or not.8x C. Barnard, The Substantive Law of the EU (2014), at 656. This meant that the principles of non-discrimination and anti-protectionism were soon replaced by the strikingly broad and ‘inherently nebulous’9x P. Oliver and S. Enchelmaier, ‘Free Movement of Goods: Recent Developments in the Case Law’, 44 Common Market Law Review 649, at 674 (2007). concept of market access. The far-reaching consequences did not take too long to make themselves felt: in the aftermath of the two rulings, a wave of speculative national litigation mushroomed, calling for all sorts of national regulations to be disapplied as contrary to the free movement provisions.10x J. Snell, ‘The Notion of Market Access: A Concept or a Slogan?’, 47 Common Market Law Review 437, at 447 (2010). See e.g. Case 286/81, Oosthoek’s Uitgeversmaatschappij BV, [1982] ECR-04575 concerning a Dutch rule prohibiting the offering of free gifts for sales promotion purposes; Case 155/80, Sergius Oebel, [1981] ECR 01993 regarding a German prohibition on night-work in bakeries; Case C-69/88 H. Krantz GmbH, [1990] ECR I-00583 on a Dutch rule granting tax authorities the power to seize goods sold on instalment terms with reservation of title in case the purchasers were not able to repay their tax debts; Case C-145/88 Torfaen Borough Council v. B & Q plc., [1989] ECR 03851 on the British prohibition of Sunday trading; Case C-23/89, Quietlynn Limited and Brian James Richards, [1990] ECR I-03059 regarding the British legislation prohibiting the sale of lawful sex articles from unlicensed sex establishments; Case 382/87, R. Buet, [1989] ECR 01235 concerning a French prohibition on canvassing in connection with the sale of English-language teaching material; Case C-271/92, Laboratoire de Prothèses Oculaires, [1993] ECR I-02899 dealing with a provision in the French Code de la Santé Publique reserving solely to holders of an optician’s certificate (Diplôme d’ opticien-lunetier) the sale of optical appliances and corrective lenses; Case C-126/91, Yves Rocher, [1993] ECR I-02361 on a German rule prohibiting advertisements using price comparisons (displaying the new price and comparing it with the old one so as to catch the eye). Most of the contested measures were indistinctly applicable regulatory requirements that applied without distinction to domestic and foreign goods or traders and did not restrict or affect inter-State trade. This avalanche of legal actions against national rules regulating marketing and selling conditions was perceived as an intrusion into the domain of national regulatory autonomy, and it was increasingly suggested that the Court should clarify and delineate the boundaries of Article 34 TFEU.11x E.L. White, ‘In Search of the Limits to Article 30 of the EEC Treaty’, 26 Common Market Law Review 235 (1989); L.W. Gormley, ‘Case 145/88, Torfaen Borough Council v. B&Q PLC (formerly B&Q Retail Ltd.), Preliminary reference under Art. 177 EEC by the Cwmbran Magistrates’ Court on the interpretation of Arts. 30 & 36 EEC. Judgment of the Court of Justice of the European Communities of 23 November 1989’, 27 Common Market Law Review 141 (1990); A. Arnull, ‘What Shall We Do on Sunday?’, 16 European Law Review 112 (1991); K. Mortelmans, ‘Article 30 of the EEC Treaty and Legislation Relating to Market Circumstances: Time to Consider a New Definition?’, 28 Common Market Law Review 115 (1991); J. Steiner, ‘Drawing the Line: Uses and Abuses of Article 30 EEC’, 29 Common Market Law Review 749 (1992). In the same vein, Advocate General Tesauro in Hünermund courageously admitted that he had changed his mind in relation to his views in a previous case law,12x Opinion of Advocate General Tesauro in Case C-292/92, Ruth Hünermund, [1993] ECR I-06787, para. 26. and he opined that the Dassonville formula could not be construed as meaning that a potential reduction in imports caused solely and exclusively by a more general (and hypothetical) contraction of sales could constitute an MEEQR.13x Ibid., para. 25. Accordingly, he asserted that rules that regulated the manner in which a trading activity was carried out were in principle to be regarded as falling outside the scope of Article 34 TFEU, insofar as they did not intend to regulate trade itself and they were not liable to render market access less profitable (and thus indirectly more difficult) for importers.14x Ibid. He believed that this approach was in line with the principle of mutual recognition established in Cassis de Dijon and did not in any way undermine its truly integrationist inspiration.15x Ibid. A different (i.e. more intrusive) interpretation of Article 34 TFEU ‘would ultimately render nugatory the Treaty provisions … or in any event devalue them’.16x Ibid., para. 27.

2.2 The Keck Ruling and the Introduction of the Concept of Selling Arrangements

The Court sooner or later realised that its broad definition of MEEQR and its blurry and ill-defined market-access approach had opened a Pandora’s box. Thus, in 1993, when it was called upon to rule on the compatibility of a French prohibition on resale at a loss, it decided to put an end to the opportunistic and unsubstantiated litigation (though arguably in a clumsy manner). It explicitly expressed its intention to re-examine and clarify its case law in view of the increasing tendency of traders to invoke Article 34 TFEU as a means of challenging any rules whose effect was to limit their commercial freedom even where such rules were not aimed at products from other Member States.17x Joined Cases C-267/91 and C-268/91, Keck and Mithouard, at 14. Thus, it introduced the famous (or rather infamous) concept of selling arrangements: rules that restricted or prohibited certain selling arrangements were not such as to hinder directly or indirectly, actually or potentially trade between Member States as long as two conditions were fulfilled: (i) they applied to all relevant traders operating within the national territory; and (ii) they affected in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States.18x Ibid., at 16. The exact content of the concept of selling arrangements was revealed in subsequent case law: rules on shop opening hours,19x Joined Cases C-401/92 and C-402/92, Boermans, [1994] ECR I-02199; Joined Cases C-69/93 and C-258/93 Punto Casa and PPV, [1994] ECR I-02355; Joined Cases C-418/93 et al., Semeraro Casa Uno and Others, [1996] ECR I-02975; Case C-483/12, Pelckmans, published in the electronic Reports of Cases. rules requiring processed milk for infants be sold only in pharmacies20x Case C-391/92, Commission v. Greece (processed milk for infants), [1995] ECR I-01621. and certain restrictive rules on advertising21x Case C-292/92, Ruth Hünermund, [1993] ECR I-06787; Case C-412/93, Leclerc-Siplec v. TF1 Publicité, [1995] ECR I-00179; Joined Cases C-34/95, C-35/95 and C-36/95, De Agostini, [1997] ECR I-3843; Case C-405/98, Gourmet, [2001] ECR I-1795. are some examples of the type of national regulatory provisions that were captured by the concept of selling arrangements and were thus excluded from the scope of Article 34 TFEU. In general terms, rules relating to the place and time of sales as well as to the marketing of specific products were in principle considered to be caught by the Keck-formula.22x Case C-71/02, Herbert Karner, [2004] ECR I-03025, at 38. However, the somewhat artificial dichotomy between product rules and selling arrangements proved inadequate and sparked an academic debate.23x The Keck judgement and its implications for the functioning of the internal market have been extensively analysed by legal scholars. See indicatively L. Gormley, ‘Reasoning Renounced? The Remarkable Judgment in Keck & Mithouard?’, 5 European Business Law Review 63 (1994); M.P. Maduro, ‘Keck: The End? The Beginning of the End? Or Just the End of the Beginning’, 1 Irish Journal of European Law 30 (1994); N. Bernard, ‘Discrimination and Free Movement in E.C. Law’, 45 International and Comparative Law Quarterly 82 (1996); C. Barnard, ‘Fitting the Remaining Pieces into the Goods and Persons Jigsaw?’, 26 European Law Review 35 (2001); A. Tryfonidou, ‘Was Keck a Half-Baked Solution After All?’, 34 Legal Issues of Economic Integration 167 (2007); I. Lianos, ‘Shifting Narratives in the European Internal Market: Efficient Restrictions of Trade and the Nature of “Economic” Integration’, 21 European Business Law Review 705 (2010); C. Barnard, ‘What the Keck? Balancing the Needs of the Single Market with State Regulatory Autonomy’, 2 European Journal of Consumer Law 201 (2012); S. Weatherill, ‘The Road to Ruin: “Restrictions on Use” and the Circular Lifecycle of Article 34 TFEU’, 2 European Journal of Consumer Law 359 (2012). Lawrence Gromley noted that the exclusion of selling arrangements from the scope of Article 34 TFEU would lead to a lack of judicial review of ostensibly innocent measures, which could, however, constitute disguised restrictions on inter-State trade.24x L.W. Gormley, ‘Two Years After Keck’, 19 Fordhman International Law Journal 866, at 885-886 (1996). Stephen Weatherill, while recognising that the ruling excluded from the scope of the Treaty certain regulatory choices that do not damage the realisation of economies of scale, he nevertheless considered that it had a ‘disturbingly formalistic tone’ and it was ‘flawed by the absence of an adequate articulation of just why it was possible to conclude that no sufficient impact on trade between States was shown’.25x S. Weatherill, ‘After Keck: Some Thoughts on How to Clarify the Clarification’, 33 Common Market Law Review 885, at 887 (1996). He thus proposed a refined Keck-test that would allow Member States to apply national regulatory measures to imported goods as long as they would apply equally in law and in fact to domestic and foreign goods and they would not impose direct or substantial hindrance to market access.26x Ibid., at 903. The origin of this refined test can be traced back to the Advocate General Jacobs’ opinion in Leclerc-Siplec,27x Opinion of Mr. Advocate General Jacobs in Case C-412/93 Leclerc-Siplec, [1995] ECR I-00179. where he expressed his famous objection to the Keck-inspired presumption of lawfulness of selling arrangements and proposed the adoption of a test based on ‘substantial hindrance on market access’ for determining whether non-discriminatory rules infringed Article 34 TFEU.28x Ibid., para. 39. The significance of the impact on market access was also espoused by other Advocates General29x Opinion of Advocate General Stix-Hackl in Case C-322/01, DocMorris NV, [2003] ECR I-14887, para. 78, where he underlined that ‘The decisive factor should therefore be whether or not a national measure significantly impedes access to the market’. See also Opinion of Mr. Advocate General Van Gerven in Case C-145/88, Torfaen, [1989] ECR-03851, para. 24, where he argued that there was no room for a de minimis test, because Article 34 TFEU already presupposes a serious, and therefore a more than appreciable, obstruction to trade between Member States. and legal scholars as a criterion for establishing the existence of an MEEQR.30x M.S. Jansson and H. Kalimo, ‘De Minimis Meets “Market Access”: Transformations in the Substance – and the Syntax – of EU Free Movement Law?’, 51 Common Market Law Review 523 (2014). It is interesting to note that the authors of this article distinguish three substantive groups of de minimis thresholds: the magnitude (severity) of the restrictive effect, the probability of the restrictive effect and the causality between the measure and the restrictive effect. See also Steiner, above n. 11; Barnard (2014), above n. 8, at 147; H. Toner, ‘Non-discriminatory Obstacles to the Exercise of Treaty Rights – Articles 39, 43, 49, and 18 EC’, 23 Yearbook of European Law 275, at 285 (2004). Conversely, c.f. Weatherill (1996), above n. 25, who refrains from describing the ‘direct or substantial hindrance to market access’ test as a de minimis threshold. It was argued that the case law offered room for de minimis considerations in free movement law, in the sense that ‘minimal restrictive effects’ did not affect market access, while several trade restrictions hindered significantly market access and thus impinged on Article 34 TFEU.31x Jansson and Kalimo, above n. 30, at 526. However, the position of the Court was less clear. Although it had ostensibly rejected the adoption of a de minimis test in the free movement assessment,32x Joined Cases 177 and 178/82, Jan van de Haar, [1984] ECR-01797, at 13; Case C-67/97, Ditlev Bluhme, [1998] ECR I-08033, at 20; Joined Cases C-1/90 and C-176/90, Aragonesa de Publicidad and Publivía v. Departamento de Sanidad, [1991] ECR I-4151, at 24; Joined Cases C-277/91, C-318/91 and C-319/91 Ligur Carni and Others, [1993] ECR I-6621, at 37. it effectively accepted a similar test by acknowledging that if the effect on market access was ‘too uncertain or indirect’33x Case C-69/88, H. Krantz GmbH, [1990] ECR I-00583, at 11; Case C-190/98, Volker Graf, [2000] ECR I-00493, at 25 (in the field of free movement for workers). Conversely, in Case C-415/93, Bosman, [1995] ECR I-04921, at 103, the Court found that the transfer rules at issue directly affected players’ access to the employment market in other Member States and were thus capable of impeding the freedom of movement for workers. Similarly, in Case C-384/93, Alpine Investments, [1995] ECR I-01141, the Court ruled that the prohibition of cold calling by telephone for financial services directly affected access to the market in services in the other Member States and was thus capable of hindering intra-Community trade in services. or ‘purely hypothetical’,34x Case C-299/95, Friedrich Kremzow v. Republik Österreich, [1997] ECR I-02629, at 16, where the Court interestingly ruled that whilst any deprivation of liberty may impede a person from exercising his or her right to free movement, a purely hypothetical prospect of exercising that right does not establish a sufficient connection with Community law to justify the application of free movement provisions. then the contested measure did not infringe free movement provisions.

2.3 The Post-Keck Market Access Test

The Court started widening the scope of Article 34 TFEU by restricting the scope of selling arrangements and gradually adopted an over-inclusive ‘market access’ test.35x This over-inclusive market access test has been criticised by some scholars. See e.g. Catherine Barnard notes that the intrusion into national regulatory autonomy can have profound repercussions for national legislation adopted by democratic governments, as almost every national regulatory requirement can in one way or another affect the economic freedom of market operators, even if that was never the intention of the legislator and the effect on trade is inappreciable. See Barnard (2014), above n. 8, at 20. In particular, in subsequent case law, the Court interpreted the two conditions contained in paragraph 16 of Keck as meaning that certain selling arrangements could not escape the scrutiny of the free movement provisions if they were discriminatory or they imposed additional burdens on imported goods (in the sense of the ‘dual burdens’ that the principle of mutual recognition was intended to eliminate under the Cassis de Dijon judgement). Cases such as Familiarpress,36x Case C-368/95, Familiapress, [1997] ECR I-03689. De Agostini,37x Joined Cases C-34/95, C-35/95 and C-36/95, De Agostini. Gourmet 38x Case C-405/98, Gourmet. and Alfa Vita 39x Joined Cases C-158/04 and C-159/04, Alfa Vita, [2006] ECR I-08135, at 19. signalled the transition from an approach based on a formalistic distinction between ‘product rules’ and ‘selling arrangements’ to a more straightforward test based on ‘market access hindrance’.40x For the notion of the market access, see Snell (2010), above n. 9; G. Davies, ‘Understanding Market Access: Exploring the Economic Rationality of Different Conceptions of Free Movement Law’, 11 German Law Journal 671 (2010); C. Barnard, ‘Restricting Restrictions: Lessons for the EU from the US?’, 68 Cambridge Law Journal 575 (2009); E. Spaventa, ‘From Gebhard to Carpenter: Towards a (Non)-Economic European Constitution’, 41 Common Market Law Review 743 (2004); Case C-531/07, Fachverband der Buch- und Medienwirtschaft v. LIBRO Handelsgesellschaft mbH, [2009] ECR I-03717. Progressively, the Court departed from the Keck-test, without, however, overruling it explicitly. In Commission v. Italy (trailers) 41x Case C-110/05, Commission v. Italy (trailers), [2009] ECR I-00519. and Mickelsson and Roos,42x Case C-142/05, Mickelsson and Roos, [2009] ECR I-04273. the Court reintroduced a refined market access test according to which rules restricting the use of products hinder the market access of foreign products and therefore constitute MEEQR prohibited under Article 34 TFEU.43x For an academic discussion, see for instance L. Prete, ‘Of Motorcycle Trailers and Personal Watercrafts: The Battle over Keck’, 35 Legal Issues of Economic Integration 133 (2008); P. Pecho, ‘Good-Bye Keck?: A Comment on the Remarkable Judgment in Commission v. Italy, C-110/05’, 36 Legal Issues of Economic Integration 257 (2009); P. Wenneras and K.B. Moen, ‘Selling Arrangements, Keeping Keck’, 35 European Law Review 387 (2010); P. Oliver, ‘Of Trailers and Jet Skis: Is the Case Law on Article 34 TFEU Hurtling in a New Direction?’, 33 Fordhman International Law Journal 1423 (2011); G. Davies, ‘The Court’s Jurisprudence on Free Movement of Goods: Pragmatic Presumptions, Not Philosophical Principles’, 2 European Journal of Consumer Law 25 (2012). In the same vein, in LIBRO,44x Case C-531/07, Fachverband der Buch- und Medienwirtschaft v. LIBRO Handelsgesellschaft mbH, [2009] ECR I-03717. the Court ruled that book price-fixing45x Specifically, the case concerned an Austrian law prohibiting Austrian importers of German-language books from fixing a retail price below that fixed or recommended by the publisher for the State of publication. of German language books in Austria constituted an MEEQR contrary to Article 34 TFEU,46x Case C-531/07, Fachverband der Buch- und Medienwirtschaft, at 21-22. as it could potentially hinder market access for German book importers.47x Ibid. Furthermore, the predominance of the ‘market access’ test was very recently reiterated in the Scotch Whisky case,48x Case C-333/14, The Scotch Whisky Association and Others, [2015] n.y.p. where Court held that the Scottish imposition of a minimum price per unit of alcohol prevented the lower cost price of imported products being reflected in the selling price to the consumer and was thus capable of hindering the access to the UK market of alcoholic drinks that were lawfully marketed in other Member States.49x Ibid., at 32. However, this ‘market access’ test is sometimes qualified by an additional step, which requires that the measure at issue have a direct/substantial/significant effect on inter-State trade. Thus, in Ker-Optika, the Hungarian prohibition on the selling of contact lenses via the Internet was deemed to be an MEEQR within the meaning of Article 34 TFEU, because it deprived traders from other Member States of a particularly effective means of selling those products and therefore significantly impeded market access.50x Case C-108/09, Ker-Optika, [2010] ECR I-12213, at 54. By the same token but in a different context, recently the Court found that the Spanish legislation prohibiting tobacco retailers from importing tobacco products and forcing them to procure their supplies from authorised wholesalers hindered the access of these products to the market. This was despite the contentions of the Commission and the Spanish Government that the legislation at issue had to be assessed in the light of Art. 37 TFEU, because it concerned the operation of a monopoly of a commercial character and the restrictions on trade that are inherent in the existence of such a monopoly. See Case C-456/10 Asociación Nacional de Expendedores de Tabaco y Timbre (ANETT) v. Administración del Estado [2012], published in the electronic reports of cases, at 21, 43. Although admittedly the Court is not very consistent in the terminology or the precise tests that it uses, the fact nonetheless remains that its analysis implicitly includes a quantitative element: only measures that directly/substantially/significantly affect inter-State trade are captured by the MEEQR definition. By contrast, measures with hypothetical, remote, uncertain or indirect effect on market access escape from the internal market scrutiny.51x It could be argued that the ‘substantial effect’ test refers to a certain threshold that needs to be met in order for a measure to constitute an MEEQR, whereas the ‘remote effect’ test seeks to establish a link of causality between the contested measure and restriction on inter-State trade. Be that as it may, this distinction is not unproblematic, that is why some authors see a convergence of the two tests. See in particular Barnard (2014), above n. 8, at 147; Weatherill (1996), above n. 25, at 900; D. Doukas, ‘Untying the Market Access Knot: Advertising Restrictions and the Free Movement of Goods and Services’, 9 Cambridge Yearbook of European Legal Studies 177 (2007).