Free Movement of Goods PDF

**INTERNATIONAL HELLENIC UNIVERSITY\ LLM in Transnational and European Commercial Law, Banking Law, Arbitration/Mediation\ **\ **European Economic Law**\ \ \ **Dr Thomas Papadopoulos,\ LLB with Distinction (Thessaloniki), MJur, MPhil, DPhil (Oxford),\ Ass. Professor, Department of Law, University of...

**INTERNATIONAL HELLENIC UNIVERSITY\ LLM in Transnational and European Commercial Law, Banking Law, Arbitration/Mediation\ **\ **European Economic Law**\ \ \ **Dr Thomas Papadopoulos,\ LLB with Distinction (Thessaloniki), MJur, MPhil, DPhil (Oxford),\ Ass. Professor, Department of Law, University of Cyprus,\ Visiting Professor, International Hellenic University (Greece)\ Editorial Secretary, European Company Law (ECL) Journal (Kluwer)\ [t.papadopoulos\@ihu.edu.gr]** **FREE MOVEMENT OF GOODS** [Text and Materials used from/Reference to:]\ Alina Kaczorowska, *European Union Law*, 2nd Edition, 2010, Routledge-Cavendish. **\ FREE MOVEMENT OF GOODS\ Content\ -**The customs union and the prohibition of customs duties and all charges having equivalent effect to customs duties (CEE)\  \ -Discriminatory internal taxation\  \ -Quantitative restrictions (QRs) and measures having equivalent effect on imports and exports (MEQRs) -- Articles 34 and 35 TFEU\  \ -Article 36 TFEU **THE CUSTOMS UNION AND THE\ PROHIBITION OF CUSTOMS DUTIES\ AND ALL CHARGES HAVING\ EQUIVALENT EFFECT TO CUSTOMS\ DUTIES (CEE)** **Introduction**\ -Article 28 TFEU provides for the establishment of a customs union between the Member States covering all trade in goods.\ \ -Goods are not defined in the Treaties but the ECJ has defined them as all products which have a monetary value and which may be the object of commercial transactions.\ \ -Any customs union has two dimensions: **internal**, which involves the creation of a single customs territory between the participating states in which there are no customs duties or other restrictions on trade between the participating states, and **external**, which requires that the same customs duties and trade regulations apply to trade with all non-participating states. The external aspects of the customs union within the EU are based on the Common Customs Tariff and the Common Commercial Policy. The internal aspects of the customs union are covered by Articles 28--30 TFEU. **\ Introduction\ -**Article 30 TFEU prohibits a Member State from maintaining customs duties on goods imported from other Member States; on its exports; and on goods from third countries released by a Member State for free circulation in the EU; as well as from introducing any ***[charges having equivalent effect to customs duties (CEE).]***\  \ -*The concept of a CEE is an autonomous EU legal concept. It has been defined by the ECJ as covering any pecuniary charge, however small and whatever its designation and mode of application, which is imposed unilaterally on goods by reason of the fact that they cross a frontier, including a regional and internal frontier, even if it is not discriminatory, protectionist or imposed for the benefit of the Member State.\ * **\ Introduction**\ CEEs are prohibited unless they fall within the two exceptions to the prohibition set out in Article 30 TFEU, i.e. the prohibition does not apply:\ \ -[When the payment is consideration for a service actually rendered to the importer or exporter.] However, such a service must genuinely benefit the importer, must provide a specific benefit to him, rather than be imposed for reasons of the general interest, and the sum charged for the service must be proportionate to the cost of the service.\  \ -[To payments for a service which is required under EU law or under international law.] In such a situation a Member State is allowed to charge for that service provided the amount charged does not exceed the real cost of providing the service.**\ \ ** **Customs union: its external and internal aspects.**\ \ **Article 28(1) TFEU** regulates **both external and internal** aspects of the customs union. It states that: "The Union shall comprise a customs union which shall cover all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries."\ \ The **external** aspects of the customs union within the EU are based on the Common Customs Tariff and the Common Commercial Policy.\ The **internal** aspects of the customs union are covered by **Articles 28--30 TFEU.** **Internal aspects of the customs union within the EU**\  \ With the completion of the internal market in 1992, all formalities at national borders were abolished and the European Community became a territory without internal borders. Spot checks may still take place for drugs and immigration purposes, but routine border checks were abolished.\  \ [Strategy of the EU for the Customs Union]: Decision 253/2003 ("Customs 2007"), Decision 624/2007 ("Customs 2013") and "Fiscalis 2008--2013". **[Meaning of charges having equivalent effect to customs duties (CEE)]**\ \ Article 30 TFEU prohibits not only customs duties but also any CEE. The prohibition of CEEs prevents Member States trying to get around Article 30 by relabelling or disguising what are in fact still customs charges/taxes.\  \ There is no definition of "charges having equivalent effect to customs duties" in the Treaties. In Case 24/68 Commission v Italy \[Re Statistical Levy\],1245 the ECJ ***defined CEE as***:\ \ "any pecuniary charge, however small and whatever its designation and mode of application, which is imposed unilaterally on goods by reason of the fact that they cross a frontier and which is not a custom duty in the strict sense..., even if it is not imposed for the benefit of the State, is not discriminatory or protective in effect and if the product on which the charge is imposed is not in competition with any domestic product." **\ \ \ \ CHARACTERISTICS OF CEE-RELEVANT CASE LAW**\ - **It must be a pecuniary charge** (Case 46/76 Bauhuis v Netherlands). Other obstacles are within the scope of the provisions relating to non-tariff barriers on the free movement of goods.\ - **Its amount is irrelevant**. Even a small charge (Case 24/68 Commission v Italy \[Re Statistical Levy\] ) or a charge below the direct and indirect costs of services provided by the customs authorities (Case C-111/89 Bakker Hillegom) is prohibited by Article 30 TFEU.\ - **It may result not only from a measure imposed by a Member State or other public authorities but also from an agreement concluded between individuals** as exemplified in Case 16/94 Dubois et Fils SA and General Cargo Services v Garoner (GA) Exploitation SA \[1995\] ECR I-2421.\ - **The designation and mode of application of a charge** is irrelevant for the application of Article 30 TFEU. Thus, it is considered as a CEE whether it is called a special charge (Joined Cases 2 and 3/62 Commission v Luxembourg) or a "price supplement" (Case 77/76 Fratelli Cucchi v Avez SpA) or a fee levied in order to defray the costs of compiling statistical data (Case 24/68 Commission v Italy \[Re Statistical Levy\]), or otherwise. \- **Its beneficiaries or its destination are irrelevant.** The leading authorities on this point are Joined Cases 2 and 3/69 Sociaal Fonds v Brachfeld and Chougol Diamond Co. In that case Belgium imposed a levy on imported diamonds which was not protectionist (Belgium is not a producer of diamonds) but was designed to provide social security benefits for workers in the diamond industry. The ECJ held that the levy was contrary to Article 25 EC \[Article 30 TFEU\]. In Joined Cases C-441 and 442/98 Kapniki Mikhaïlidis AE and Others, the imposition of a charge, the proceeds of which were to provide social benefits for workers in the tobacco industry, was condemned by the ECJ. Also, a charge made to protect the historical and artistic heritage of a Member State has been found unlawful (Case 7/68 Commission v Italy). \- **It must be imposed by the reason of or on the occasion of the crossing of a frontier by goods, but the time and the place of imposition is not relevant.** In Case 78/76 Firma Steinike und Weinlig v Bundesamt für Ernährung und Forstwirtschaft, the ECJ held that a charge need not be levied at a border in order to be a customs charge or CEE. Even a [regional frontier] is included. This was examined in Joined Cases C-363 and C-407--411/93 Lancry and Others v Direction Générale des Douanes and Others. (regional frontiers-national frontiers- imported flour into Martinique from France).\ For [internal borders], see: Case C-72/03 *Carbonati\ Apuani.* -Article 30 TFEU encompasses charges imposed **at any stage of production or marketing.**\ - **Compensatory taxes** are also CEE. This was established in Cases 2 and 3/62 Commission v Luxembourg \[Re Gingerbread\]. In this case, the governments of Luxembourg and Belgium imposed a special import duty on imported gingerbread in order to compensate for the price difference between domestic gingerbread and imported gingerbread. Domestic gingerbread was more expensive as a result of high internal rates of taxation on rye, an ingredient of gingerbread. The ECJ held that a special import duty levied on imported gingerbread was a CEE. Indeed, the objective of the tax was not to equalise the taxes on gingerbread but to equalise the price of it! **Categories of charges**\  \ **There are three categories of charges:\ *A)charges imposed solely on imported goods,\ \ B)charges imposed on both domestic and imported goods and,\ \ C)charges imposed solely on domestic goods.*** ***[A) Charges imposed solely on imported goods]***\ If a charge is imposed only on imported products and does not fall within the exceptions to the prohibition laid down in Article 30 TFEU, it is clearly in breach of that article. There are no justifications for it. ***[\ \ B) Charges imposed on both domestic and imported goods]***\ It is important to establish whether such a charge is imposed in the same way on domestic products and on imported products and to assess its purpose.\ \ In Case 29/72 [Marimex] SpA v Italian Minister of Finance, a charge imposed on both domestic and imported meat in respect of veterinary inspections carried out in Italy in order to verify whether meat satisfied health standards required by Italian legislation was held unlawful by the ECJ. This was on the ground that inspections of imported meat were conducted by [a body different] from that inspecting domestic meat and each body applied criteria different from those applied by the other. Even if charges imposed on both domestic and imported products are applied in the same way and according to the same criteria, they may be CEEs [if the proceeds of the charge are to benefit domestic products exclusively.] This was decided in Case 77/72 [Capolongo] v Azienda Agricola Maya. In this case, Italy imposed a charge on all egg boxes, domestic and imported, in order to finance the production of paper and cardboard in Italy. The charge constituted a part of an overall charge on cellulose products. The ECJ held that although the charge applied without discrimination to both domestically produced and imported egg boxes, it was to benefit domestic manufacturers alone and as such was discriminatory and constituted a CEE. In Case 77/76 [Fratelli Cucchi v Avez SpA], the ECJ set out the criteria which should be applied in order to assess [whether a particular charge that is applied indiscriminately on both domestic and imported products is contrary to Article 30 TFEU] or is within the scope of other Articles of the Treaties. In this case the same charge was levied on domestic and imported sugar, but its proceeds were intended to finance "adaptation aids" to the Italian beet producers and the sugar-processing industry. *[The ECJ held that such a charge would be a CEE if all the following criteria were met:]* ***1)***If it had the sole purpose of financing activities for the specific advantage of domestic products; ***2)***If the domestic products on which a charge was imposed and the domestic products which were to benefit from it were the same; and ***3)***If the charge imposed on the domestic products was "made up" in full. That is, if, in fact, by way of a tax refund or otherwise domestic producers did not pay any charge at all. (See ,Article 110 TFEU, which prohibits direct and indirect discriminatory internal taxation, and Article 107 TFEU on state aid.) ***[C) Charges imposed exclusively on domestic goods.]***\ \ It is unusual for a Member State to discriminate against goods produced domestically and thus afford preferential treatment to imported goods, but such reverse discrimination was examined by the ECJ in Case 222/82 Apple and Pear Development Council v K J Lewis. In this case, The Apple and Pear Development Council, a semi-public body, was set up in England and Wales to conduct research, to provide information, to collect statistics and to promote the consumption of apples and pears in England and Wales. A domestic levy was imposed on apples and pears grown in England and Wales to finance the Council's activities. Lewis, a grower of apples and pears, refused to pay the compulsory levy as being contrary to EC law. The ECJ found that as the levy did not apply to imported products, it was compatible with Article 25 EC \[Article 30 TFEU\].\ [That was a narrow approach.] [\ lenient approach\ \ ]The lenient approach of the ECJ to charges imposed solely on domestic products changed in Joined Cases C-441/98 and C-442/98 [Kapniki Mikhaïlidis AE and Idrima Kinonikon Asphaliseon (IKA).]\ Mikhaïlidis, a Greek public limited company, carried on business in the tobacco sector. Mikhaïlidis brought proceedings against IKA (a Greek social security institution which paid pensions and lump-sum compensation to insured persons and pensioners of the Tobacco Workers' Insurance Funds) for the refund of charges paid by Mikhaïlidis on the export of tobacco from Greece to Member States and non-Member States between 1990 and 1995. The charges were in fact (under different guises) imposed unilaterally on both domestic tobacco products being exported and on domestic tobacco products intended for the domestic market, and were credited to IKA for the benefit of the Tobacco Workers' Pension Branch. Mikhaïlidis argued that the charges were incompatible with Community law as being charges having equivalent effect to customs duties on export. IKA claimed that the charges levied were in fact a tax imposed on domestic tobacco products irrespective of whether or not exported in accordance with objective criteria and within the framework of the Greek general system of taxation. The ECJ applied exactly the same approach to charges imposed exclusively on domestic products, as to charges imposed exclusively on imported products. The ECJ held that "it follows from the general and absolute nature of the prohibition of all customs duties applicable to goods moving between Member States that customs duties are prohibited". The ECJ held that had a charge been imposed by reason of the fact that goods had crossed a frontier, the charge would have had equivalent effect to a customs duty and as such would be in breach of Articles 23 and 25 EC \[Articles 28 and 30 TFEU\]. [Charges imposed exclusively on domestic goods:] *are CEEs if they fall more heavily on\ domestic goods intended for export than on domestic goods intended for a domestic\ market* ***[Exceptions to the prohibition.]***\ A pecuniary charge is deemed to escape the prohibition embodied in Article 30 TFEU\ **A)** if it is levied for a service genuinely rendered to the trader or\ **B)** a service required under EU law/international law. Both exceptions, as any exceptions to a general rule, have been strictly interpreted by the CJEU. ***[A) A service rendered to the trader]***\ Member States have tried to justify the imposition of charges on a number of grounds, the most popular being that a charge is in fact a fee paid for a service rendered to the trader. The first time this "justification" was invoked was in Joined Cases 52 and 55/65 Commission v Germany. The ECJ defined fees levied by Germany on importers for the provision of an import licence as a CCE on the ground that it did not bring any benefit to the importer. The ECJ has gradually specified strict conditions which, if they apply cumulatively, allow a charge to escape the prohibition of Article 30 TFEU. A charge levied on goods by reason of the fact that they cross a frontier is not a CEE if it constitutes consideration for a specific service actually and individually rendered to the trader and the amount demanded is proportionate to the cost of supplying such a service.\ Therefore a charge will be lawful if it satisfies three criteria:\ \ *1) The service must be of genuine benefit to the trader*\ *2) The service must provide a specific benefit to the trader*\ *3) The sum charged must be proportionate to the cost of the service* [1) The service must be of genuine benefit to the trader.]\ \ The condition that a service must provide a genuine benefit to the trader is very difficult to satisfy, taking into account [the strict interpretation by the ECJ of a "genuine benefit".] This is illustrated in Case 132/82 Commission v Belgium \[Re Storage Charges\]. In this case, the Belgian authorities introduced a system whereby goods in Community transit could undergo customs clearance either at the border or in assigned warehouses within Belgium. If customs clearance in a warehouse was selected by the trader, the customs authorities imposed storage charges on the goods. The Commission took exception to the levying of these costs, alleging that they were charges having an equivalent effect to customs duties and as such were prohibited under the EC Treaty. The Commission brought proceedings against Belgium before the ECJ. The ECJ held that charges which are levied as part of the process of customs clearance on Community goods or goods in free circulation within the Community [constitute CEEs, if they are imposed solely in connection with the completion of customs formalities.] The ECJ accepted that the use of a public warehouse in the interior of the country offered certain advantages to importers. Nevertheless, given that such advantages were linked solely with the completion of customs formalities (which, whatever the place, were always compulsory) and that the storage charges were payable equally when the goods were presented at the public warehouse solely for the completion of customs formalities, even though they had been exempted from storage and the importer had not requested that they be put in temporary storage, the ECJ ruled that they were in breach of Article 25 EC \[Article 30 TFEU\]. [2) The service must provide a specific benefit to the trader.]\ The service must be specific. This means that the trader must obtain [a definite specific benefit, enhancing his personal interest, not the general interest of all traders] operating in the particular sector of the economy. This criterion was explained, for the first time, in Case 63/74 *W. Cadsky SpA v ICE.* In this case, Cadsky exported vegetables from Italy to Germany. The Italian Government imposed a mandatory quality control on products crossing the Italian frontier for which it charged exporters. Cadsky paid but later brought proceedings for recovery of sums paid. The Italian Government argued that the challenged fees represented payment for a service rendered to the trader since quality control constituted recognition of the quality of its products abroad, and in addition contributed to the improvement of the reputation of Italian products. The ECJ held that the charge did not constitute payment for a service rendered to the operator, because a general system of quality control imposed on all goods did not provide a sufficiently direct and specific benefit to the trader. The benefit related to the general interest of all Italian vegetable exporters and, consequently, the individual interest of each of them was so ill-defined that a charge could not be regarded as consideration for a specific benefit actually and individually conferred. Another leading case on this topic is Case 24/68 Commission v Italy \[Re Statistical Levy\]. The Italian Government imposed a levy designed to finance the gathering of statistics on all imports and exports. It argued that the statistical service was for the benefit of importers and exporters. The ECJ held that the advantage provided to importers was too general and uncertain to be considered as a service rendered to the trader. [Member States have often tried to justify charges **in respect of health inspections,** arguing that they provide a benefit to the trader consisting of recognising the quality of imported goods. This justification has been rejected by the ECJ.]\ \ In Case 39/73 Rewe-Zentralfinanz GmbH v Direktor der Landwirtschaftskammer Westfalen- Lippe, charges imposed in relation to health inspections on apples were considered as a CEE on the grounds that the inspections were not carried out for the specific benefit of the trader but for public benefit as a whole. In Case 87/75 Bresciani v Amministrazione Italiana delle Finanze, the ECJ held that charges\ in respect of veterinary inspections carried out on imported raw cowhides were a CEE since the inspection was mandatory under Italian law, and thus did not provide a specific service to the importer and all importers were obliged to submit to the inspection. In addition they were conducted in the general interest and thus the inspection fees should be paid by the beneficiaries, that is, the general public, which benefits from the free movement of goods. **[The individualisation of the benefit as a condition justifying a charge]** was also evident in Case 340/87 Commission v Italy. In this case, the Italian customs authorities offered traders, at their request, an opportunity to complete customs formalities outside business hours in exchange for payment. The working hours of the Italian customs officials were only six hours a day. This was contrary to Directive 83/643 (then in force), which required customs posts to be open for at least 10 hours a day without interruption from Mondays to Saturdays, and at least six hours without interruption on Sundays. The ECJ held that Italy was in breach of EC law by imposing fees on traders for administrative and customs formalities which were partially carried out during normal opening hours of customs posts. The opening hours for customs posts, being harmonised under an EC Directive, could not be considered as a specific service rendered to the trader. In addition, for a charge to escape the prohibition of Article 25 EC \[Article 30 TFEU\] it is necessary for the service provided to be genuine and individualised. In this case the last criterion was not satisfied. A more recent case on this topic is Case C-389/00 Commission v Germany. The German authorities imposed on exporters of waste a compulsory contribution to a solidarity fund set up under the 1989 Basle Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposals as implemented by the relevant EC legislation. The contribution was designated to guarantee the financing of the return of waste into Germany in the event of illegal or incomplete exports, in circumstances where the party responsible was not in a position to bear those costs or could not be identified. The German Government argued that this service conferred a real benefit on exporters, since the subsidiary guarantee taken on by the state allowed them to penetrate the markets of the other Member States and also of the other contracting parties to the Basle Convention. In this case, the ECJ emphasised that the Basle Convention imposed the same obligations on all Member States in pursuit of a general interest, namely protection of health and the environment, and the compulsory contribution fund did not confer on exporters of waste established in Germany any specific or definite benefit. They have the same opportunities as their competitors established in other Member States. Thus, nothing was given in return for their contribution. The charge was a CEE. [3) The sum charged must be proportionate to the cost of the service]\ The third criterion is that the sum charged for the service must be proportionate to the cost of the service. This criterion was explained by the ECJ in Case 170/88 Ford España v Spain. In this case, Ford España received a bill for clearing cars and goods through customs equal to 1.65 per cent of the declared value of cars and other goods imported into Spain. The Spanish Government argued that the sum represented fees for services rendered to Ford España. The ECJ accepted that in this case the service was genuine and the benefit was of the required specific nature. Nevertheless, the charge was in breach of Article 25 EC \[Article 30 TFEU\] as it was based not on the cost of the service but on the value of the goods and as such was not commensurate with the service. The position seems to be that only if a trader requests a service of his own volition will it be\ accepted as a benefit by the ECJ. ***[B) A mandatory service]***\ \ *[If a service is required under EU law or under international law, that is, mainly on the basis of an agreement to which the EU is a contracting party, a Member State is allowed to charge for that service provided the amount charged does not exceed the real cost of providing the service.]* This exception was examined by the ECJ in Case 18/87 Commission v Germany \[Re Animals Inspection Fees\]. Measures were brought into effect throughout the European Community by Council Directive 81/389 which permitted Member States to carry out veterinary inspections on live animals transported into or through their national territories. Certain German provinces, known as Länder, charged fees for the cost of conducting those inspections. The charges imposed were justified, according to the German Government, to cover the actual costs incurred in maintaining the inspection facilities. The Commission argued that these charges amounted to charges having an equivalent effect to customs duties and could not be justified under the Directive. Accordingly, the Commission brought an action against Germany before the ECJ. (cont.)\ The ECJ held that charges imposed in relation to health inspections required by Community law \[EU law\] are not to be regarded as CEE if the following conditions are satisfied:\ **1.** They do not exceed the actual costs of the inspections in connection with which they are charged;\ **2.** The inspections are obligatory and uniform for the relevant products in the Community;\ **3.** The inspections are prescribed by Community law in the general interests of the\ Community;\ **4.** The inspections promote the free movement of goods, in particular by neutralising obstacles which could arise from unilateral measures of inspection adopted in accordance with Article 30 EC \[Article 36 TFEU\].\ The ECJ held that the charges imposed for health inspections were not a CEE as they satisfied the above-mentioned criteria. The ECJ specified that the negative effect that such a fee may have on intra-Community trade could be eliminated only by virtue of Community provisions providing for the harmonisation of fees, or by imposing the obligation on the Member States to bear the costs entailed in the inspections, or, finally, by establishing that the costs are to be paid out of the Community budget. **DISCRIMINATORY INTERNAL\ TAXATION** **Article 110\ (ex Article 90 TEC)**\ No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.\ \ Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products. Fiscal barriers to trade may result **not only from customs duties and charges having equivalent effect to them** but also from the imposition on imported products of **national taxes** with which domestic products are not burdened. [Article 110 TFEU guarantees that this will not happen.] Its main objective is to ensure that **the internal taxation system of a Member State makes no distinction between domestic and imported products.** This was clearly stated by the ECJ in Case 252/86 Bergandi in which it was held that Article 90 EC \[Article 110 TFEU\] ["must guarantee the complete neutrality of internal taxation as regards competition between domestic products and imported products".] *Article 110 TFEU does not prohibit internal taxation. A Member State is free to set up a system of taxation which it considers as the most appropriate in respect of each product.\ **DEFINITION:***\ The ECJ held in Case 90/79 Commission v France \[Re Levy on Reprographic Machines\] that a genuine tax is a measure relating to a system of internal dues applied systematically to categories of products in accordance with objective criteria irrespective of the origin of the products. Included in the concept of a tax are: tax refunds, stamp duties, countervailing charges and excise duties. ***[DIRECT EFFECT OF ARTICLE 110 TFEU]***\ In order to reduce the risk of the application of discriminatory internal taxation in respect of products from other Member States, the ECJ, in one of its earliest judgments, recognized that Article 110 TFEU is ***[directly effective]***. In Case 57/65 Lütticke GmbH v Hauptzollamt,1290 the ECJ held that Article 90 EC \[Article 110 TFEU\] is clear, unconditional and not qualified by any condition, or subject to the requirement of legislative intervention on the part of Community institutions. Consequently it is of direct effect in the relationship between a Member State and an individual. **Article 110 TFEU**\ Article 110 TFEU allows each Member State to set up its systems of internal taxation as it considers appropriate but prohibits three kinds of discrimination by way of taxation:\ **1)**Direct discrimination against imported products based on their nationality. This is always unlawful and can never be justified (Case 57/65 Lütticke GmbH v Hauptzollamt);\ **2)**Indirect discrimination against imported products based on factors other than nationality (Case 112/84 Humblot v Directeur des Services Fiscaux). This may be justified by objective criteria (Case 196/85 Commission v France);\ **3)**Reverse discrimination against domestic products intended for export which are more heavily taxed than domestic products intended for a domestic market (Case C-234/99\ Niels Nygård ). This is prohibited under Article 110 TFEU. However, *indirect discrimination*, where differential tax treatment of imported products is based on criteria other than the origin of the product, although generally prohibited, may be ***[justifiable where it is based on objective criteria and is effected in order to achieve acceptable social, environmental or economic aims (but the Court tends not to accept purely economic justifications). The list of objective justifications is rather vague and open-ended but not inconsistent with allowed justifications in other areas of free movement.]*** **SIMILAR PRODUCTS, PRODUCTS IN COMPETITION AND UNIQUE PRODUCTS**\ \ Similar products must pay the same tax rate as each other (Article 110(1) TFEU). Similarity is assessed on the basis of two criteria:\ **A)**the objective characteristics of the products (243/84 John Walker) in terms of their origin, method of production, organoleptic qualities, and so on;\ **B)**their substitutability from the point of view of consumers (Case 45/75 Rewe-Zentrale). It takes into account consumers' views as to whether both products meet the same needs.\ \ An imported product is regarded as similar to a domestic product if it *satisfies both the above criteria.* **A)**The first criterion refers to the ***[objective characteristics of domestic and imported products.]*** In Case 243/84 John Walker, the ECJ had to decide whether whisky and fruit liqueur wines were similar products for the purposes of Article 90(1) EC \[Article 110 TFEU\]. The ECJ specified the objective characteristics as relating to origin, production and organoleptic qualities, in particular the taste and alcohol content of these products. In both products the same raw material -- alcohol -- was found, but its content in whisky was twice that in liqueur wines. However, the production and organoleptic qualities were very different. For that reason the Court held that they were not similar products within the meaning of Article 90(1) EC \[Article110 TFEU\]. **B)** [The second criterion is that if it is shown that domestic and imported products share the same objective characteristics, ***their similarity must be determined from the point of view of consumers***]. In Case 45/75 Rewe-Zentrale, the ECJ held that products are similar from the point of view of consumers if they are considered by them as ***[having similar characteristics and meeting the same needs.]*** The assessment of similarity is normally based on the Small but Significant and Non-transitory Increase in Price test (the SSNIP test ), according to which if a substantial number of consumers are likely to switch to an imported product if the price for the domestic product increases by 5 to 10 per cent (this is a small but significant increase) the imported product and domestic product are regarded as similar products, i.e the imported product is a substitute of a domestic product from the point of view of consumers.\ \ In Case 106/84 *Commission v Denmark*[, the ECJ applied both criteria in respect of wine] made from the grape and wine made from other fruits. They share the same objective characteristics as both are made from agricultural products, have the same alcohol content and are produced by means of the same process of fermentation. Also from the point of view of consumers they satisfy the same needs and are highly substitutable. The ECJ held that wines made from the grape and wines made from other fruits were similar products. ***[Direct discrimination]***\ -Direct discrimination based on nationality of a product is easy to spot. For that reason there are only a limited number of cases in which the ECJ has dealt with direct discrimination against imported products. It happened, however, in Case 57/65 Alfons Lütticke GmbH v Hauptzollamt Sarrelouis. In this case, Lütticke imported whole milk powder from Luxembourg, on which German customs levied duty and a turnover tax. Lütticke challenged the claim for payment of turnover tax on the ground that domestic natural milk and whole milk powder were exempt from it. The ECJ condemned the German tax.\ \ -The ECJ insists on equal treatment of domestic and imported products, even though in some instances an internal tax may be beneficial to most importers and disadvantageous only to a few of them. This is illustrated in Case 127/75 Bobie Getränkevertrieb v Hauptzollamt Aachen-Nord. (taxation of domestic and imported Beer).\ -Article 110 TFEU also ensures that if treatment that would otherwise be preferential is given to domestic products, it must be extended to similar imported products. This issue was examined in Case 21/79 Commission v Italy \[Re Regenerated Oil\]. ***[Indirect discrimination]***\ Direct discriminatory taxation is easy to detect in the light of the strict prohibition embodied in Article 110 TFEU. As a result, Member States have tended to try *[to conceal]* by subtle means discriminatory internal taxes imposed on imported products. This was examined in Case 112/84 Humblot v Directeur des Services Fiscaux. In this case, under French law annual tax on cars differentiated between cars below 16 hp (horse power) (the tax rate was progressively increased up to a maximum of FF1,100) and above 16 hp (a flat rate tax of FF5,000 was applied). France did not manufacture cars above 16 hp. Consequently, all French-made cars were subject to a maximum tax of FF1,100 but all imported cars more powerful than 16 hp were subject to a higher tax. Humblot, who bought a Mercedes in France, challenged the French law. The ECJ held that the French law was in breach of Article 90 EC \[Article 110 TFEU\] as it was\ protectionist and discriminatory in respect of cars imported from other Member States. ***[It indirectly discriminated against imported cars, although there was no formal distinction between imported and domestic cars.]*** Both 1)the rate of direct and indirect internal taxation on domestic and imported products and, also, 2)the basis of assessment and rules regarding the imposition of the tax are important in determining whether there is a breach of Article 110 TFEU. This is exemplified by Case C-375/95 Commission v Greece. **Case C-375/95 Commission v Greece**\ The Commission brought proceedings against Greece for introducing and maintaining in force the following national rules contrary to Article 90 EC \[Article 110 TFEU\]:\ **1.** Article 1 of Greek Law 363/1976 as amended by Law No 1676/1986 related to a special consumer tax applicable to imported used cars, under which in the assessment of their taxable value only 5 per cent reduction of the price of equivalent new cars was permitted for each year of age of the used cars and the maximum reduction was fixed at 20 per cent of the value of equivalent new cars.\ **2.** Article 3(1) of Law No 363/1976, which was replaced by Article 2(7) of Law 2187/1994, concerning the determination of the taxable value of cars in order to levy the flat-rate tax, added a special duty which contained no reduction for used cars.\ **3.** Article 1 of Law No 1858/1989 as amended many times regarding the reduction of a special consumer tax for anti-pollution technology cars applied only to new cars and not to imported used cars with the same technology. The Commission stated that the Greek Government was in breach of Article 90 EC \[Article 110 TFEU\] since the above-mentioned legislation created a system of internal taxation that indirectly discriminated against used cars imported from other Member States in comparison with used cars bought in Greece. **Case C-375/95 Commission v Greece**\ The ECJ held that the national rules for calculating special consumer tax and flat-rate added duty in order to determine the taxable value of imported used cars were in breach of Article 90 EC \[Article110 TFEU\]. The special consumer tax applicable only to imported used cars was in breach of Article 90 EC \[Article 110 TFEU\]. The ECJ rejected the argument submitted by Greece that the special consumer tax was also applied to domestic used cars when they were first purchased within the country, and that part of it remained incorporated in the value of those cars. The ECJ emphasised that the special consumer tax on imported used cars was usually higher than the proportion of the tax still incorporated in the value of used cars already registered and purchased on the Greek market, taking into account that the annual depreciation in the value of cars is considerably more than 5 per cent, that depreciation is not linear, especially in the first years when it is much more marked than subsequently, and, finally, that vehicles continue to depreciate more than four years after being put into circulation. The ECJ condemned a special consumer tax for anti-pollution technology cars, which was applied only to new cars and not to imported used cars with the same technology, as being in breach of Article 90 EC \[Article 110 TFEU\]. Following the above case, the ECJ has dealt with many cases concerning discriminatory taxes imposed on second-hand cars imported from other Member States. More recently, courts of the Member States which joined the EU on and after 1 May 2004 have been faced with this "old problem". In Case C-387/01 Harald Weigel and Ingrid Weigel v Finanzlandesdirektion für Vorarlberg*,* the ECJ confirmed that a national tax system that is liable to eliminate a competitive advantage held by imported products over domestic products would breach Article 110 TFEU. **Reverse discrimination**\ It is extremely rare that a Member State imposes higher taxes on domestic goods than on identical or similar imported goods. This may, for example, occur if a Member State intends to discourage export of a valuable scarce commodity, and indeed there are other possible circumstances.\ \ In Case C-234/99 Niels Nygård v Svineafgifsfonden, and Ministeriet for Fødevarer, Landbrug og Fiskeri (pigs bred in Denmark), the ECJ clearly stated, for the first time, that Article 110 TFEU also applies to discriminatory taxes imposed on domestic goods for export. **Objective justification**\ *[Differential taxation of products, which may serve the same economic ends, is not prohibited under Article 110 TFEU in so far as it is justified on the basis of objective criteria. However, direct discrimination based on the nationality of the product can never be objectively justified]*. In Case C-375/95 Commission v Greece, the ECJ held that national rules granting tax advantages (that is, reducing the special consumer tax) which applied only to new anti-pollution technology cars and not to imported second hand cars with the same technology, could not be objectively justified under Article 90 EC \[Article 110 TFEU\]. Differential taxation where the criterion for charging a higher rate is ***[the importation itself]*** and where domestic goods are by definition excluded from the heavier taxation is always in breach of Article 110 TFEU. **Objective justification**\ Indirect discrimination, even if it results in discrimination against imported products, may be justified if it is based on objective criteria. The ECJ has taken a liberal approach in respect of these criteria. [They may be based on the nature of the use of the raw materials, the processes employed in the production or manufacturing of goods, or they may refer to general objectives of economic and social policy of a Member State such as the protection of the environment or the development of regional policy, so far as those policies are compatible with EU law.] The leading case on this topic is Case 196/85 Commission v France. In this case, France levied lower taxes on sweet wines produced in a traditional and customary fashion in certain regions of France than on imported liqueur wines (also sweet). The tax differentiation was not directly discriminatory as all similar wines, irrespective of the country of origin, could qualify for the lower rate of taxation. It was for France to justify the indirect discrimination. In this respect France showed that natural sweet wines were produced in areas of low rainfall and poor soil, whose economy depended on wine production. France argued that its regional policy was to encourage production in poor growing areas and thus develop those regions, and that this tax concession was open to all EU producers. The ECJ accepted that a lower taxation levy on French sweet wines was objectively justified. **Objective justification**\ Similarly, in Case 21/79 Commission v Italy, the Italian Government imposed a tax on imported and domestic cars based on their capacity to pollute, which was objectively justified on the ground of the protection of environment, although in the particular circumstances it imposed a heavier burden on imported cars than on domestic cars.\ *[It can be seen from the above that the list of objective justifications is rather vague and openended, but not inconsistent with justifications allowed in other areas of free movement.]* Article 110(2) TFEU deals with imported products, which although not similar to domestic products, are nevertheless in competition with domestic products. Article 110(2) TFEU prohibits taxation that affords indirect protection to domestic products and thus ensures that domestic products are not protected from competitive pressures by the internal system of taxation. Products in competition may suffer different tax rates but a Member State must remove any unlawful element of protection by adjusting tax rates upwards for domestic products and downwards for imported products (Article 110(2) TFEU). *In assessing the competitive relationship between domestic and imported products, it is important to consider both the present state of the market and also its possible future development, including the further potential for substitution of products for one another. Thus, the consolidation of consumer habits in any Member State should not be encouraged by the tax policy of that Member State* (Case 170/78 Commission v UK \[Re Tax on Beer and\ Wine\]).\ [Even partial, indirect and potential competition is taken into\ account. If a Member State infringes Article 110(2) TFEU, it must remove the protectionist taxes. The result of this is likely to be that products in competition will continue to be taxed at different\ rates from each other but the difference will be less substantial than previously.] [The concept of "products in competition" is wider than the concept of "similar products". In Case 170/78 Commission v UK \[Re Tax on Beer and Wine\]], the ECJ explained the scope of the application of Article 90(2) EC \[Article 110(2) TFEU\] in respect of "products in competition". It was one of many so-called "spirit cases". In this case, the UK maintained different levels of internal taxation for beer (£0.61 per gallon) and wine (£3.25 per gallon). Wine was mostly imported while beer was predominantly a domestic product. The Commission decided that this tax difference amounted to discrimination against imported wine and that by increasing the tax on wine, the British Government was encouraging consumers to buy beer. The UK argued that the two products were not interchangeable and therefore there was no breach of Article 90 EC \[Article 90 TFEU\]. **DECISION**\ The ECJ held that that in order to determine the existence of a competitive relationship, it is necessary to take into account [not only the present state of the market but also "possible developments regarding the free movement of goods within the Community and the further potential for substitution of products for one another which might be revealed by intensification of trade".] The ECJ stated that wine and beer were, to a certain extent, substitutable as they were capable of meeting the same needs of consumers. To measure the degree of substitutability, consumers' habits in a Member State, or in a particular region, should be taken into account, although these habits should not be regarded as immutable. Indeed, the tax policy of a Member State should not crystallise consumers' habits and thus consolidate an advantage gained by domestic producers. The Italian Government submitted that it was appropriate to compare beer with the most popular, lightest and cheapest wine because those products were in real competition. The ECJ agreed and held that the decisive competitive relationship between beer and wine must be established by reference to the lightest and cheapest wine. Those products were in competition. Consequently, the ECJ found the UK in breach of Article 90(2) EC \[Article 110(2) TFEU\]. Following the decision of the ECJ the UK removed the unlawful element of protection by adjusting tax rates for beer upwards and for wine downwards, but there were still different rates applied to both products. This case and many others show that often there is not only a potential market for an imported\ product competing with a domestic product, but also that while such a market may exist, it is\ often suppressed by an unfair tax system. *[Three stages in the application of Article 110(2) TFEU can be identified:]*\ **A)**[First, it must be established that there is a competitive relationship between an imported product and a domestic product.] In conformity with the case law of the ECJ an imported product and a domestic product are in such a relationship if they are substitutable, i.e. they are capable of meeting the same needs of consumers.\ **B)**[An examination of the tax arrangements for each product is required in order to identify differences between them.] In respect of products in competition this is not difficult given that they are dissimilar and therefore subject to different tax arrangements.\ **C)**If there are differences between tax arrangements, it is necessary to examine the alleged protectionist consequences deriving from differences between the tax arrangements for domestic and imported products. [Not only direct and actual but also indirect and potential protectionist effect is taken into account.] In order to assess the alleged protectionist effect, the ECJ examines the impact of taxation by reference to the difference between the final selling prices of the products and the impact of that difference on consumers' choice, both at the level of an individual consumer and the collective tendencies of consumers. Case C-167/05 Commission v Sweden Case C-167/05 Commission v Sweden illustrates the stages which the ECJ follows in the application of Article 110(2) TFEU. In this case, The Commission brought proceedings against Sweden for breach of Article 90(2) EC \[Article 110(2) TFEU\] on the basis that by applying a system of internal taxes under which strong beer (in excess of 3.5 per cent alcohol per volume), which was mainly produced in Sweden, was indirectly protected, as compared with the lightest, least expensive and the most popular wine (around 11 per cent alcohol per volume) mainly imported from other Member States. When Sweden acceded to the EU its excise duty on strong beer and light wine was almost identical. In 1997 Sweden reduced excise duty on beer by 40 per cent to respond to the substantial increase in cross-border trade in beer between Sweden and Denmark. Following the Commission's investigation, in 2001, Sweden reduced excise duty on wine by 18.8 per cent per volume. According to the Commission despite the reduction in excise duty on wine, it was subject to higher excise duty than beer by more than 20 per cent, and the Swedish tax system in respect of beer was therefore protectionist. *The ECJ held that the difference in the tax treatment of beer and wine was not such as to afford indirect protection to Swedish beer. This was because, first, the difference between the selling prices of a litre of strong beer and a litre of wine was virtually the same before and after taxation, and second, the Commission did not submit any statistical information showing that variations in the price of those products were likely to bring long-term changes in consumer habits in favour of wine and to the detriment of beer. The ECJ emphasised that certain sensitivity on the part of consumers to short-term changes in the prices of products in competition was not sufficient to evidence that the difference in the tax treatment of those products was liable to influence consumer behaviour.* **Unique products\ **It may occur that an imported product is unique in the sense that there is neither a similar domestic product nor a domestic product in competition with the imported product. In Case 193/79 Cooperativa Cofruta v Amministrazione delle Finanzo dello Stato, Italy claimed that bananas were such unique products. In this case, Italy imposed a high tax on bananas. Italy is not considered to be a producer of bananas (its production is so insignificant that it was not taken into consideration). Accordingly, the Italian Government argued that bananas were neither similar to nor in competition with any domestic product. On the grounds that a consumption tax was imposed on other exotic products such as coffee, cacao, and so on, in order to raise revenue for the state, the ECJ decided that bananas formed part of a broader Italian taxation system which was based on objective criteria unconnected with the origin of the product. The ECJ considered that bananas were, nevertheless, in competition with other table fruits. Taking into account the high tax imposed on bananas as compared to other table fruits, the ECJ concluded that Italy indirectly protected domestic table fruits by setting such a high rate of taxation on bananas. Consequently, Italy was held in breach of Article 90(2) EC \[Article 110(2) TFEU\]. Unique products (that is, those which are neither similar to nor in competition with any domestic product) may pay any tax rate, but any excessive imposition may be caught by Article 34 TFEU as a measure having equivalent effect to a quantitative restriction (C-383/01 De Danske). This has never occurred! [The relationship between Article 110 TFEU and Article 30 TFEU]\ A proper classification of a fiscal imposition will determine whether such an imposition should be challenged under Article 110 TFEU in conjunction with other articles of the Treaties or whether it falls solely within the scope of Article 110 TFEU or Article 30 TFEU. Indeed, [the relationship between Article 110 TFEU and Article 30 TFEU] poses a considerable difficulty, even now, and even for the highest national courts. This is so, because Articles 110 and 30 TFEU are complementary as they both deal with fiscal charges, but are mutually exclusive in that the same fiscal charge cannot belong to both categories at the same time. **THE FOLLOWING CRITERIA MAY BE HELPFUL IN DISTINGUISHING BETWEEN A CHARGE UNDER ARTICLE 30 TFEU AND A TAX UNDER ARTICLE 110 TFEU**\ **A)**Whether an imposition is levied only on imported products or on both imported and domestic products. If it is imposed only on an imported product, it is more likely to be a charge rather than a tax;\ **B)**The definition of a charge (Case 24/68 Commission v Italy \[Re Statistical Levy\]) and of a tax (Case 90/79 Commission v France \[Re Levy on Reprographic Machines\]) provided by the ECJ;\ **C)**The destination of the proceeds of the imposition (Case 77/76 Fratelli Cucchi );\ **D)**The event that has triggered the imposition. If the imposition is triggered by reason of the product being imported/exported, it is an unlawful charge. Any other event suggests that the imposition is a tax. If a charge is incompatible with Article 110 TFEU, it is prohibited only to the extent to which it\ discriminates against imported products, whereas a charge under Article 30 TFEU is unlawful\ in its entirety. **Repayment of unlawful fiscal impositions\ **Unlawful fiscal impositions, whatever their name, that is, charges, levies, supplementary payments, ***[must be repaid.]*** Under the principle of autonomy of national procedural rules it is for the domestic legal system of each Member State to lay down procedural rules applicable to actions for recovery of sums unduly paid under Articles 30 and 110 TFEU. **QUANTITATIVE RESTRICTIONS (QRs)\ AND MEASURES HAVING\ EQUIVALENT EFFECT ON IMPORTS\ AND EXPORTS (MEQRs) -- ARTICLES 34\ AND 35 TFEU** **Article 34\ (ex Article 28 TEC)**\ Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.\ \ **Article 35\ (ex Article 29 TEC)**\ Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States.\ **\ Article 36\ (ex Article 30 TEC)**\ The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. [**Article 34 TFEU** prohibits quantitative restrictions (QRs) both total and partial on imports, and measures having equivalent effect to them (MEQRs) between Member States. **Article 35 TFEU** extends the prohibitions to exports. These prohibitions are subject to **Article 36 TFEU,** which sets out grounds on which a Member State may justify national rules contrary to **Articles 34 and 35 TFEU** and subject to exceptions developed by the case law of the ECJ.] [***Article 34 TFEU is addressed to Member States as it applies to measures adopted by them.*** The ECJ has broadly interpreted both the concept of a Member State and the concept of measures adopted by it.] The concept of a Member State includes all public bodies, emanations of a Member State and private bodies controlled by a Member State. The concept of measures refers to binding rules adopted by a Member State, as well as simple incentives and constant administrative practices. Failure to take measures, when necessary, makes a Member State responsible for the conduct of individuals which breaches EU law, if that Member State is in a position to prevent or terminate such conduct.\ EU institutions are required to respect the prohibitions set out in Article 34 TFEU. **Measures taken by semi-public bodies**\ In Case 266/87 *R v Royal Pharmaceutical Society of Great Britain, ex parte Association of Pharmaceutical Importers and Others,* the ECJ had to decide whether a measure adopted by a professional body such as the Pharmaceutical Society of Great Britain may come within the scope of Article 28 EC \[Article 34 TFEU\]. In this case, the Royal Pharmaceutical Society of Great Britain is a professional body established to\ enforce rules of ethics for pharmacists throughout the UK. This organisation convenes periodic meetings of a committee which has statutory authority to impose disciplinary measures on pharmacists found to have violated the rules of professional ethics. The Society enacted rules which prohibited a pharmacist from substituting one product for another that has the same therapeutic effect but bears a different trade mark when doctors prescribe a particular brand of medication. Pharmacists were therefore required to dispense particular brand name products when these were specified in prescriptions. This rule was challenged as being a MEQR prohibited by Article 28 EC \[Article 34 TFEU\]. *The ECJ held that Article 28 EC \[Article 34 TFEU\] applies not only to rules enacted by the Member States but also encompasses rules adopted by a professional body such as the Royal Pharmaceutical Society of Great Britain, which exercises regulatory and disciplinary powers conferred upon it by statutory instrument.* [The ECJ stated that professional and ethical rules adopted by the Society, which required pharmacists to supply under a prescription only a particular brand name drug, may constitute MEQRs in breach of Article 28 EC \[Article 34 TFEU\]. In this case the measures were justified under Article 30 EC \[Article 36 TFEU\].] **Measures taken by private companies supported financially or otherwise by a Member State when carrying out activities contrary to Article 34 TFEU**\ \ This is illustrated by Case C-325/00 Commission v Germany. In this case, Germany argued that a German fund set up by the German Government to promote German agriculture and the German food industry, but which carried out its activity through the CMA -- a private company whose organs were set up in accordance with private law rules and financed by compulsory contributions paid by undertakings in the German agriculture and food sector -- was not a public body. However, the ECJ held that CMA was a public body. **Conduct of individuals who violate Article 34 TFEU**\ \ Until 1995 it had always been accepted that the prohibition contained in Article 28 EC \[Article 34\ TFEU\] concerned an action taken by the Member State and not passivity or inaction on its part.\ ***[However, the ECJ decided otherwise in Case C-265/95 Commission v France.]*** **[Case C-265/95 Commission v France (Spanish strawberries)]**\ For a decade the Commission received complaints regarding the passivity of the French Government in the face of acts of violence and vandalism committed by French farmers, such as interception of lorries transporting agricultural products from other Member States and destruction of their loads, threats against French supermarkets, wholesalers and retailers dealing with those products, damage to such products when on display in shops, and so on. The Commission, supported by the Governments of Spain and the UK, stated that on a number of occasions the French authorities showed unjustifiable leniency vis-à-vis the French farmers, for example, by not prosecuting the perpetrators of such acts when their identity was known to the police, since often the incidents were filmed by television cameras and the demonstrators' faces were not covered. Furthermore, the French police were often not present on the spot even though the French authorities had been warned of the imminence of demonstrations, or they did not interfere, as happened in June 1995 when Spanish lorries transporting strawberries were repeatedly attacked by French farmers at the same place over a period of two weeks and the police who were present took no protective action. The Government of France rejected the arguments submitted by the Commission as unjustified.\ The ECJ held that France was in breach of its obligations under Article 28 EC \[Article 34 TFEU\], in conjunction with Article 10 EC \[Article 4(3) TFEU\], and under the common organisation of the markets in agricultural products for failing to take all necessary and proportionate measures in order to prevent its citizens from interfering with the free movement of fruit and vegetables. *This is one of the landmark decisions of the ECJ*. It held that Article 28 EC \[Article 34 TFEU\] is also applicable where [***a Member State abstains*** from taking the measures required in order to deal with obstacles to the free movement of goods, which obstacles are not created by the Member State. *Abstention thus constitutes a hindrance to the free movement of goods*], and is just as likely to obstruct trade between Member States as is a positive act. However, Article 28 EC \[Article 34 TFEU\] in itself is not sufficient to engage the responsibility of a Member State for acts committed by its citizens, but is so when read in the light of Article 10 EC \[Article 4(3) TEU\], which requires the Member States not merely themselves to abstain from adopting measures or engaging in conduct liable to constitute an obstacle to trade, but also to take all necessary and appropriate measures to ensure that the fundamental freedom regarding the free movement of goods is respected on their territory. Notwithstanding the fact that the ECJ recognises that a Member State has exclusive competences in relation to the maintenance of public order and the safeguard of internal security, it assesses the exercise of that competence by a Member State in the light of Article 28 EC \[Article 34 TFEU\]. As a result, the ECJ stated that the French authorities failed to fulfil their obligations under the Treaty on two counts: first, they did not take necessary preventive and penal measures; second, the frequency and seriousness of the incidents, taking into account the passivity of the French authorities, not only made the importation of goods into France more difficult but also created a climate of insecurity that adversely affected the entire intra-Community trade. **[The implications of Case C-265/95 Commission v France were highlighted in Case C-112/00 Eugen Schmidberger, Internationale Transporte und Planzüge v Austria.]**\ In this case, Eugen Schmidberger, a German undertaking transporting timber and steel between Germany and Italy via the Brenner motorway, brought proceedings before the Austrian courts against the Republic of Austria, claiming that the Austrian authorities were in breach of Articles 28 and 29 EC \[Articles 34 and 35 TFEU\] as they failed to ban a demonstration organised by an Austrian environmental organisation, the Transitforum Austria Tirol (TAT), on the Brenner motorway that resulted in the complete closure of that motorway for almost 30 hours. TAT organised the demonstration in order to draw public attention to problems caused by the increase in traffic on the Brenner motorway and to call upon the Austrian authorities to take the necessary measures to deal with these problems; it had obtained authorisation from the local authorities to hold the demonstration on the Brenner motorway. Eugen Schmidberger sought compensation for losses suffered as a result of the closure of the Brenner motorway, claiming that Austria's failure to ban the demonstration constituted a sufficiently serious breach of EC law for which Austria should be liable. The Austrian Government contended that the claim should be rejected on the grounds that the decision to authorise the demonstration was made after careful examination of the facts, that all known users and other parties likely to be affected by the closure of the motorway were informed in advance, that the demonstration was peaceful and did not result in traffic jams or other incidents, that the obstacle that it created was neither serious not permanent and that the demonstrators were entitled to exercise their freedom of expression and freedom of assembly, rights which are fundamental in a democratic society and enshrined in the ECHR and the Austrian Constitution. The ECJ recognised that the closure of the motorway constituted an obstacle to the free movement of goods but accepted that the fact that the authorities of a Member State did not ban a demonstration in circumstances such as those of the main case was not incompatible with Articles 28 EC and 29 EC \[Articles 34 and 35 TFEU\] read together with Article 10 EC \[Article 4(3) TEU\]. **[The ECJ made a distinction between Case C-265/95 Commission v France and the Schmidberger case.]** The Court emphasised that although in both cases the free movement of goods was obstructed, there were important differences between the circumstances of the respective cases in terms of the geographical scale and the intrinsic seriousness of the disruptions caused by individuals, as well as the manner in which the national authorities had acted in order to deal with these disruptions. The ECJ pointed out that the demonstration in Austria took place after being duly authorised by the relevant national authorities, was limited to a single occasion, was of short duration, and its objective was to allow citizens to exercise their fundamental rights to express publicly their views on a matter which was of importance to them and to society. Furthermore, the Austrian authorities limited as far as possible the disruption to road traffic, taking into consideration that they had taken appropriate measures to ensure that the demonstration passed off peacefully and without any serious incidents, all parties likely to be affected were informed in advance and advised to take alternative routes specially designed for this occasion. In contrast, in Case C-265/95 Commission v France the French authorities did not take any measures when faced with serious and repeated disruptions of the free movement of goods by its nationals, which disruptions were of such seriousness as to create a general climate of insecurity undermining the free movement of goods. The decisions of the ECJ in the above cases have far-reaching implications. They mean that a Member State may be liable under Article 34 TFEU linked with Article 4(3) TEU if it does not prevent or adequately punish any conduct of its economic operators which is capable of hindering the free movement of goods. Therefore, a Member State is forced to intervene in situations where, for example, private individuals decide to promote domestic products to the detriment of those from other Member States or otherwise obstruct trade between Member States. **The definition of QRs and MEQRs under Article 34 TFEU**\ The Treaties neither define QRs nor MEQRs. There is no problem in defining QRs as these have been in use for centuries. *They restrict importation and exportation by amount or by volume.* The most common restrictions on the physical quantity of imports or exports are quotas and bans. In Case 2/73 Risetia Luigi Geddo v Ente Nazionale Risi, *the ECJ defined them as any measures which amount to a total or partial restraint on imports, exports or goods in transit. A total restraint refers to a ban.* In Case 7/61 Commission v Italy \[Re Ban on Pork Imports\], *the ECJ condemned such a ban as contrary to Article 28 EC \[Article 34 TFEU\].* The Treaties neither define QRs nor MEQRs. While QRs are easy to define as they refer to classical bans and quotas prohibiting or limiting importation by amount or by volume, [MEQRs are more problematic. Directive 70/50/EEC provided some guidance for the first time as to the meaning of MEQRs.] ***The Directive divided MEQRs into two categories: distinctly and indistinctly applicable measures***:\ [**A)**Distinctly applicable] measures are those which make a distinction between imported and domestic products in such a way that they "hinder imports which could otherwise take place, including measures which make importation more difficult or costly than disposal of domestic goods" (Article 2(1) of the Directive);\ [**B)**Indistinctly applicable] measures are those which apply to imported and domestic products alike, but their restrictive effect on the free movement of goods "exceeds the effect intrinsic to trade rules", that is, they in fact hinder intra-Community trade (Article 3 of the Directive). This occurs "where the restrictive effects on the free movement of goods are out of proportion to their purpose" or "where the same objective can be attained by other means which are less of a hindrance to trade". Accordingly, such measures are lawful if they satisfy the requirements of the principle of proportionality. The ECJ established [its own definition of MEQRs in Case 8/74 Procureur du Roi v Dassonville. Known as the **Dassonville formula**], it *describes MEQRs as any trading rules enacted by Member States which are capable of hindering directly or indirectly, actually or potentially, trade between Member States*. This very broad formula encompasses not only rules which have [restrictive effect], however small, but also those which are capable of [potentially hindering trade between Member States.] In Dassonville, the ECJ did not make a distinction between distinctly and indistinctly applicable measures as it focused on the restrictive effects of a measure rather than its form. However, the Court accepted that in respect of indistinctly applicable measures "reasonable" restrictions may be outside the scope of Article 28 EC \[Article 34 TFEU\]. This line of reasoning was further developed in Case 120/78 Rewe-Zentral v Bundesmonopolverwaltung für Branntwein (otherwise and generally known as the Cassis de Dijon case). **Article 34 TFEU: the Dassonville formula**\ The ECJ provided its [own definition] of MEQRs in Case 8/74 Procureur Du Roi v Dassonville. In this case, Traders imported Scotch whisky into Belgium. The whisky had been purchased from a French distributor and had been in circulation in France. However, the Belgian authorities required a certificate of origin, which could only be obtained from British customs and which had to be made out in the name of the importers, before the goods could be legally imported into Belgium. As no certificate of origin could be obtained for the consignment, the traders went ahead with the transaction. They were charged by the Belgian authorities with the criminal offence of importing goods without the requisite certificate of origin. The defendants claimed that the requirement of a certificate of origin in these circumstances was tantamount to an MEQR and therefore was prohibited by Article 28 EC \[Article 34 TFEU\]. The Belgian court referred to the ECJ for a preliminary ruling on this question. The ECJ held that the Belgian regulation constituted a MEQR because it [potentially discriminated] against parallel importers (that is, traders who are not authorised/approved dealers of a manufacturer of a product or of the holders of intellectual property rights over it, but who lawfully purchase it in a Member State where the price is lower and sell it in another Member State where the price obtainable for the same product is higher) who would be unlikely to be in possession of the requisite documentation. [**"Dassonville formula"**\ In Dassonville, the ECJ defined the concept of measures having an equivalent effect to quantitative restrictions on imports as being **all trading rules enacted by Member States which are capable of hindering directly or indirectly, actually or potentially, trade between Member States. This is known as the "Dassonville formula".** ]The formula is very broad; the effect of national measures, including their potential effect, is decisive in determining whether they should be considered as MEQRs, regardless of the motive (discriminatory or not) for their introduction. Even if national measures have [no significant effect on trade], they are still in breach of Article 34 TFEU. This is illustrated in Joined Cases 177 and 178/82 Jan Van der Haar. In this case, Dutch excise law regulating the resale of tobacco products restricted imports of these products to a very small degree and provided for alternative ways of marketing them. The ECJ held the Dutch rules breached Article 28 EC \[Article 34 TFEU\]. The ECJ emphasised that Article 28 EC \[Article 34 TFEU\] [does not recognise the de minimis rule] as it: "does not distinguish between measures... according to the degree to which trade between Member States is affected. If a national measure is capable of hindering imports it must be regarded as having an effect equivalent to a quantitative restriction, even though the hindrance is slight and even though it is possible for imported products to be marketed in other ways." **["Dassonville formula"\ ]** In Dassonville the ECJ did not make a distinction between distinctly and indistinctly applicable measures as it focused on the restrictive effects of a measure rather than on its form. However, the ECJ has encompassed within the formula both distinctly applicable measures, which affect imports only, and indistinctly applicable measures, which affect both imported and domestic products. The latter, without making a distinction between imported products and domestic products, may result in making imports more difficult or more expensive, that is, they relate to material discrimination rather than formal discrimination **Possible justification of restrictions?**\ In paragraph 6 of the judgment the Court accepted that "reasonable" restrictions imposed by indistinctly applicable measures may be outside the scope of Article 28 EC \[Article 34 TFEU\]. In this respect, the Court stated that in the absence of Community harmonising measures guaranteeing for consumers the authenticity of a product's designation of origin, a Member State is allowed to take measures to prevent unfair practices to protect consumers, subject to the condition that such measures are reasonable. This line of reasoning was further developed in Case 120/78 Rewe-Zentral v Bundesmonopolverwaltung für Branntwein (the Cassis de Dijon case).-[SEE, BELOW] **Discrimination against imported products may be formal (direct) or material (indirect).**\ **A) Formal discrimination** occurs when national measures treat similar situations in different ways that result in the hindering of trade between Member States, for example, when they impose certain customs formalities, mandatory inspections or licensing requirements that result in additional costs and delays for importers, but do not apply to domestic producers.\  \ **B)Material discrimination** takes place when a national measure theoretically treats different situations in the same way but in practice imposes additional costs for the importer and thus constitutes an obstacle to the free movement of goods (for example, the imposition of requirements concerning the packaging or the content of imported products). A national measure based on an apparently neutral criterion will amount to material discrimination if only domestic products can satisfy that criterion. This is illustrated by Case 45/87 Commission v Ireland. **\ Case 45/87 Commission v Ireland**\ The Dundalk District Council laid down certain specifications concerning a tender for the construction of the Dundalk water supply scheme that included a clause stipulating that the materials used must be certified as complying with a national technical standard, that is, asbestos cement pressure pipes had to be "certified as complying with Irish Standard Specification 188:1975 in accordance with the Irish Standards Mark Licensing Scheme of the Institute for Industrial Research and Standards". Not surprisingly, only one Irish company could satisfy the requirement set out in the clause. The ECJ held that the specification constituted a MEQR and therefore was in breach of Article 28 EC \[Article 34 TFEU\] as it excluded the use of asbestos cement pipes manufactured to an alternative standard providing equivalent guarantees of safety, performance and reliability. ***[Article 34 TFEU: national measures indistinctly applicable to domestic and imported goods -- the Cassis de Dijon approach]*\ ** The ECJ was very aware that in the absence of EU rules, it was for Member States to lay down the conditions on access to national markets for imported products. A decision needed to be made as to *the extent to which national legislation was to be tolerated.* This matter was examined in Case 120/78 Rewe-Zentral AB Bundesmonopolverwaltung Für Branntwein **[(the Cassis De Dijon case).]** ***[Cassis De Dijon case]***\ In Cassis De Dijon case, German legislation governing the marketing of alcoholic beverages set a minimum alcohol strength of 25 per cent per litre for certain categories of alcoholic products. This regulation prohibited an importer from marketing Cassis de Dijon, a French liqueur with an alcohol strength of between 15 and 20 per cent, in Germany. The German Government invoked human health and consumer protection concerns as the justification for the prohibition. The importer challenged the German legislation in the German court, which then referred the matter to the ECJ for a preliminary ruling. In Cassis de Dijon, the ECJ focused on ***[indistinctly applicable measures. Such measures, although non-discriminatory, i.e. make no distinction as to the origin of a product, can constitute a real hindrance to trade between Member States.]*** *Article 3 of Directive 70/50* clearly envisaged this possibility. In addition, the *Dassonville formula* encompasses such measures given that it covers any measures which could have or do have an adverse effect on trade regardless of the motives, whether discriminatory or not, for their introduction. ***[Main aspects of the Cassis de Dijon case.]*\ ** **A)** The ECJ confirmed that Article 34 TFEU applies to **[non-discriminatory national measures]** which hinder trade between Member States. They do so, because they are different from rules applicable in the Member State of origin of the relevant product;\ **B)** It introduced **[the rule of mutual recognition]**, that is, a presumption that goods which have been lawfully produced and marketed in one Member State can be introduced without further restrictions into other Member States. Thus, it is for the Member State of importation, and not for a trader, to prove otherwise. The principle of mutual recognition **[is often contrasted with harmonisation]**, as mutual recognition permits national differences to remain and as such is seen as a new way of facilitating integration;**\ ** ***[\ Main aspects of the Cassis de Dijon case.]***\ **C)** It introduced **[the rule of reason]**, under which a Member State is permitted to use measures which are reasonable **[(that is, "mandatory requirements" or as requirements of overriding public interest)]** to protect its vital public interests in a manner which conforms with EU law, but only in the absence of common harmonizing rules in the relevant area. Mandatory requirements include the effectiveness of commercial transactions, the protection of public health, the fairness of commercial transactions and the defence of the consumer. The list is not exhaustive and since the Cassis de Dijon case a number of new mandatory requirements have been accepted by the ECJ;\ \ **D)** It assigned to **[the principle of proportionality]** a vital role with regard to the application of the rule of reason in that indistinctly applicable measures enacted by a Member State must have effects which are proportionate to the aims they seek to achieve.***[\ ]*** ***[Impact]***\ The impact of the Cassis de Dijon judgment on the development of the free movement of goods is overwhelming. It can be said that the judgment provided the necessary legal tool to ensure free trade in the internal market:\ **A)**First, by putting [the onus of proof on a Member State] to justify a national measure, it has encouraged traders to challenge any attempt to restrict their commercial freedom;\ **B)**Second, it makes [the scope of Article 28 EC \[Article 34 TFEU\] seem limitless] as it prohibits all national rules hindering trade between Member States, including not only those relating to product specification but also those relating to their marketing. ***[Impact]***\ "The decision in Cassis reinvigorated Article \[28EC\] \[Article 34 TFEU\] in an area where it had previously had minimal impact and where it had been widely assumed legislative harmonization of divergent national rules was required to eliminate obstacles to interstate trade. Cassis de Dijon is crucial to the integration of the market through the application of Article \[28 EC\] \[Article 34 TFEU\] by the courts", S. Weatherill and P. Beaumont, EC Law, 2nd edition, 1995, London: Penguin Books, p 494. **The opportunity offered by the ECJ to Member States to justify national measures on the grounds of mandatory requirements has often been relied upon.**\ [In the absence of EU rules in a particular area, a national measure that applies without discrimination to both domestic and imported products may escape the Article 34 TFEU prohibition if it is considered as being necessary in order to satisfy mandatory requirements. In Cassis de Dijon the ECJ stated that mandatory requirements may relate in particular to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defence of the consumer. This list is not exhaustive. Therefore, it is always possible for a Member State to justify national legislation on the grounds of mandatory requirements which are not mentioned in Cassis de Dijon.] *Contrary to Article 36 TFEU, which contains an exhaustive list of possible justifications to the prohibition laid down in Article 34 TFEU, under Cassis de Dijon Member States are offered a wider choice. Subsequent case law of the ECJ shows that a number of mandatory requirements have been added to those enumerated in Cassis de Dijon. The following defences have been put forward by Member States.* **The protection of consumers and the protection of public health**\ [The ECJ has always strictly interpreted additional justifications available to Member States under the rule of reason. Only exceptionally have Member States been successful in this respect.] Among cases in which the ECJ held that national measures may be necessary to protect consumers, it is interesting to mention Case 6/81 BV Industrie Diensten Groep v J.A. Beele Handelmaatschappij BV. In this case, Two Dutch undertakings were selling cable ducts; one imported them from Sweden and the other from Germany. The Swedish cable ducts were previously protected by a patent in Germany, The Netherlands and elsewhere; the German cable ducts were first imported into The Netherlands after the patent had expired. The first undertaking selling Swedish ducts wanted to stop the other undertaking from selling the German cable ducts in The Netherlands on the ground that they were a precise imitation of the Swedish cable ducts. The ECJ held that national legislation prohibiting slavish imitations of products of a third party was justified on the ground that such slavish imitations were likely to confuse the consumers as to which products were genuine and which were imitations. However, in Case 16/83 Prantl the ECJ held that when there was a close resemblance between a German bottle known as a bocksbeutel, in which expensive wine from a particular region of Germany was sold, and an Italian bottle traditional to Italy, in which cheap imported Italian wine was sold, Germany could not rely on the protection of consumers to prohibit the sale of the Italian wine in Germany. The ECJ emphasised that as long as the Italian bottle was traditional to Italy and not an imitation of the German bottle, there was no reason to prohibit its sale in Germany. The above judgments were delivered before the EC adopted common rules on many aspects of the protection of intellectual property rights, in particular relating to the concept of confusion.\ \ *[Another successful national limitation (that is, claim to a mandatory requirement)]* was invoked in Case 220/81 Criminal Proceedings against Timothy Frederick Robertson and Others. Criminal proceedings were commenced against Mr Robertson in Belgium for selling silverplated cutlery from other Member States whose hallmarks were in breach of Belgian legislation. Under that legislation the sale in Belgium of silver-plated articles not stamped either with a Belgian hallmark or a hallmark of the Member State of exportation containing information equivalent to that provided by the Belgian hallmarks was prohibited. The ECJ held that hallmarks must be intelligible to consumers of the Member State of importation and thus accepted the defence submitted by Belgium. **In most cases the ECJ held that national measures intended to protect consumers were not necessary and that the objectives pursued by national measures could be achieved by other means that would be less of a hindrance to trade between Member States, e.g. the Cassis de Dijon case itself.** In Case 207/83 Commission v UK \[Re Origin Marking of Retail Goods\], the issue was of whether origin-marking requirements imposed on all goods, whether imported or domestic, was a MEQR. Under UK legislation certain textiles, electrical and other goods offered for retail sale had to be marketed with or accompanied by an indication of their origin. The UK argued that for consumers it was necessary to have a clear indication of the country of origin of goods as it gave an indication of their quality. The ECJ held that such a requirement merely enabled consumers to assert any prejudice they might have against foreign goods. UK legislation was contrary to Article 28 EC \[Article 34 TFEU\] as it slowed down the economic interchange between Member States. The ECJ held that manufacturers were free to indicate the country of origin but should not be compelled to do so. The protection of the environment\ In Case 302/86 Commission v Denmark \[Re Returnable Containers\], the ECJ held that the protection of environment is a mandatory requirement which may restrict the scope of application of Article 28 EC \[Article 34 TFEU\]. The ECJ reached similar conclusions: In Case C-463/01 Commission v Germany\[deposit system for non-reusable packaging\] and, in Case C-320/03 Commission v Austria\[a ban on heavy trucks (more than 7.5 tonnes) using the A12, a major motorway between Germany and Italy\]. The protection of the socio-cultural identity of a Member State.\ This justification was accepted by the ECJ in Cases 60 and 61/84 Cinéthèque SA v Fédération Nationale des Cinémas Français. In this case, French legislation prohibited the marketing of videos of films during the first year of the film's release, irrespective of whether the film was made in France or elsewhere, on the ground of the protection of the French film industry. The ECJ held that the protection of cultural activities constitutes a mandatory requirement and that the French legislation was not in breach of Article 28 EC \[Article 34 TFEU\].\ In Case 169/91 Stoke-on-Trent City Council v B&Q Plc,1376 the ECJ recognised national and regional socio-cultural characteristics as a mandatory requirement covered by the rule of reason. The improvement of working conditions. Case C-312/89 (Union Départmentale des Syndicats CGT de L'Aisne v SIDEF Conforama)\ \ The maintenance of press diversity. In Case C-368/95 Vereinigte Familiapress Zeitungsverlags- und vertriebs GmbH v Henrich Bauer Verlag, the ECJ held that maintenance of press diversity may constitute an overriding requirement justifying a restriction on free movement of goods.\ \ The prevention of fraud. Case C-426/92 Germany v Deutsches Milch-Kontor GmbH\ \ The protection of young persons, i.e. below the age of 15. Case C-244/06 Dynamic Medien Vertriebs GmbH v Avides Media AG. The protection of fundamental human rights\ In Case C-112/00 Eugen Schmidberger, the ECJ accepted that the objective of safeguarding the\ protection of fundamental rights guaranteed under Articles 10 and 11 of the ECHR was a\ mandatory requirement. **A national measure indistinctly applicable to both domestic and imported products may be justified under the rule of reason in so far as it is proportional to the objective which such a national measure seeks to achieve.**\ *[The principle of proportionality has played an essential role in excluding national measures when the objective they sought could be achieved by less stringent means. It has been applied in particular in relation to the use of generic names, presentation of products and the advertising of products]*. In Case 261/81 Walter Rau Lebensmittelwerke v De Smedt, national rules imposing certain requirements concerning the presentation of the product were examined. Under Belgian law margarine could only be sold in cube-shaped boxes in order to distinguish it from butter. The ECJ held that the requirement was disproportionate since consumers would be sufficiently protected by appropriate labelling of the product. The ECJ emphasised that appropriate labelling would achieve the same objective as national measures with less hindrance to trade between Member States. **HARMONIZATION**\ *The principles laid down in Cassis de Dijon were established in order to\ remedy the absence of EU rules in a particular area. In a field in which the EU shares competences with Member States, once it legislates in a particular\ area Member States are precluded from enacting any legislative measures in that area which conflict with EU law*. ***[When national laws of the Member States have been harmonised at EU level, the legality of additional requirements imposed by a Member State in the harmonised area depends upon whether or not the EU harmonisation is complete or partial]***. This question arose in Case 29/87 Dansk Denkavit v Ministry of Agriculture. Directive 70/524 was enacted to harmonise all the national laws of the Member States with regard to both the presence of additives in, and the labelling requirements for, feed-stuffs. However, Danish importers of animal feed-stuff were required by Danish national law to obtain approval from the Danish authorities prior to import. In particular, foreign feed-stuffs were required to comply with certain procedural and labelling requirements which exceeded those specified in the Community directive harmonising procedures for such imports throughout the Community. The ECJ held that Directive 70/524 was intended to harmonise all the material conditions for marketing feed-stuffs, including the identification of additives and their purity. Consequently, a Member State was prohibited from imposing additional health inspections not provided for by the Directive itself. As a result the justification based on the protection of public health was rejected by the ECJ. **The principle of mutual recognition.**\ The principle of mutual recognition sets out a presumption that goods which have been lawfully produced and marketed in one Member State can be introduced, without further restrictions, into other Member States. This entails that it is for the Member State of importation, and not for a trader, to prove otherwise. The principle of mutual recognition plays a vital role in respect of non-harmonised areas of EU law. The implementation of this principle has been enhanced by Regulation 764/2008 laying down procedures relating to the application of certain national technical rules to products lawfully marketed in another Member State. **Article 34 TFEU: types of measures having equivalent effect to quantitative restrictions** **National measures encouraging discrimination**\ Discrimination based on the nationality of goods is considered to be the worst type of discrimination. This is illustrated in Case 249/81 Commission v Ireland \[Re Buy Irish Campaign\]. The Irish Goods Council conducted a campaign to promote Irish products called "Buy Irish". The objectives of the campaign were set by the Irish Ministry of Industry, which also financed the campaign. The ECJ held that the campaign was in breach of Article 28 EC \[Article 34 TFEU\] as it sought to substitute domestic goods for imported goods in the Irish market and thus check the flow of imports from other Member States. This was so notwithstanding the fact that the campaign was a failure and that the Irish Government adopted non-binding measures in promoting Irish products. The ECJ stated that the decisions of the Irish Council of Goods were capable of influencing the conduct of traders and consumers in Ireland. **National measures encouraging discrimination\ ** A national scheme under which quality labels are awarded and subsequently affixed only to national products, even though a national producer can choose whether or not to apply for that label, constitutes a MEQR if the label underlines the national origin of the relevant product and thus encourages consumers to buy national products to the exclusion of imported products. Such a scheme was condemned in Case C-325/00 Commission v Germany. On the same ground in Case C-255/03 Commission v Belgium, the ECJ condemned a scheme set up by the Walloon Government instituting a "Walloon label of quality" attesting that the product on which it appeared was manufactured in Wallonia and that it possessed certain qualities and characteristics qualifying it for the award of the label. The Commission objected to any reference on the label to the geographical origin of the product. The ECJ agreed with the Commission. National measures which give preference to domestic products or confer some\ advantages on domestic products\ The ECJ considers national measures which give preference to domestic products or confer some advantages on domestic products as discriminatory and thus they amount to MEQRs. This is exemplified in Case 72/83 Campus Oil. Irish legislation imposed on importers of petroleum products an obligation to acquire a certain percentage of their requirements from a state-owned refinery operating in Ireland at prices fixed by the competent Irish ministry. Thus, the Irish legislation gave preference to domestic products. The ECJ held that the Irish legislation was in breach of Article 28 EC \[Article 34 TFEU\] but could be justified under Article 30 EC \[Article 36 TFEU\] on the basis of public security and public policy exceptions.\ \ Another example is provided by Case 192/84 Commission v Greece. The Greek Government imposed on the Agricultural Bank of Greece an obligation not to finance any purchase of imported agricultural machinery unless there was proof that no similar machinery was manufactured in Greece. The ECJ regarded this measure as an MEQR. Similarly, in Case 263/85 Commission v Italy, Italian legislation which made provision of state aid to Italian public bodies conditional upon the purchase of vehicles made in Italy was held in breach of Article 28 EC \[Article 34 TFEU\], since it modified the flow of vehicles from other Member States and thus constituted a hindrance to the free movement of goods. Restrictions relating to the price of goods\ ***[Price control may take various forms: price freezes, imposition of maximum or minimum prices, imposition of minimum or maximum profit margins, and resale price maintenance.]*** The imposition of a minimum price was examined in Case 82/77 Openbaar Ministerie v Van Tiggele. Criminal proceedings were brought against Van Tiggele for selling gin below the national fixed price. The ECJ stated that the fixing of a minimum price for both imported and domestic products was not in breach of Article 28 EC \[Article 34 TFEU\] provided it did not impede imports. The breach will occur "when a national authority fixes prices or profit margins at such a level that imported products are placed at a disadvantage in relation to identical domestic products either because they cannot profitably be marketed in the conditions laid down or because the competitive advantage conferred by lower prices is cancelled out". In this case the ECJ held that the Dutch law was in breach of Article 28 EC \[Article 34 TFEU\]. Import licences and other similar procedures applicable to imported products\ *[The ECJ held that import licences and other similar procedures, even if they are only formalities, constitute MEQRs in so far as they intend to limit or delay importations]* (Joined Cases 51--54/71 International Fruit Company , Case 68/76 Commission v France, Case 41/76 Donckerwolcke \[1976\]). This is exemplified in Case 40/82 Commission v UK \[Re Imports of Poultry Meat\]. In this case, the UK introduced a licensing system for poultry imported from all Member States except Denmark and Ireland. This amounted in practice to a ban, in breach of Article 28 EC \[Article 34 TFEU\]. The UK argued that the system was necessary to protect the health of animals, in particular to prevent the spread of a highly contagious disease affecting poultry known as Newcastle disease. The ECJ rejected this argument for a number of reasons. It appeared that the measure was introduced to respond to pressure by domestic poultry breeders concerned about the increased volume of imports of poultry from other Member States (especially from France); was imposed before Christmas (when consumers traditionally buy poultry, especially turkey); and there had been no outbreak of Newcastle disease in France for five years! All these reasons convinced the ECJ that the UK introduced the licensing system in order to safeguard commercial interests, in particular in the light of massive state aid granted to French poultry breeders by the French Government. Import licences and other similar procedures applicable to imported products [National measures which require that only persons established within a national territory may apply for a licence to sell products coming from other Member States are unlawful per se.] In Case 155/82 Commission v Belgium, the ECJ condemned Belgian legislation restricting the right to apply for approval of pesticides for non-agricultural use and phytopharmaceutical products to persons established in Belgium. In Case 247/81 Commission v Germany, the ECJ condemned German law requiring that only undertakings having their headquarters in Germany were allowed to sell pharmaceutical products in Germany. ***[Prior authorisation procedures]*** for importation of goods ar