European Law Case Study Internal Market
Term Paper in European Law II
According to the German 'Beer Act' (the successor statute of the famous 1516 Bavarian Beer Purity Law), alcoholic drinks may only be called "beer" in Germany if they consist exclusively of malt, hops, water and yeast. If they include additional ingredients, they may not be named "beer".
In other EU Member States such restrictions do not exist. Other ingredients are allowed for producing beer. Due to the German rules beer from other Member States can only be sold as "beer" in Germany if it complies with the German regulation. Otherwise it has to be re- named or re-labeled.
The European Commission doubts whether the German regulations are in conformity with Art. 34 TFEU. It initiates an infringement procedure against Germany. In the reply to the Commission’s letter of formal notice the German Federal Government argues that this law is necessary to protect consumer needs. If a drink is labeled as "beer", German consumers have specific expectations as regards its ingredients. Besides, the restriction is necessary in terms of health protection. The negative impact of other additives on the human body is unforeseeable. As beer is practically a staple in Germany such a strict rule is justified. The Commission is not convinced and issues a reasoned opinion giving Germany two months to amend the Beer Act in order to comply with Art. 34 TFEU. The German Federal Government upholds its position that German law is already in conformity with the Treaty.
The Commission, dissatisfied with this reply, files an application to the European Court of Justice under Art. 258 TFEU. It seeks a judgment of the ECJ declaring that Germany is in breach of Art. 34 TFEU.
What will be the judgment of the ECJ?
Author: Alexandra Edler
Thesis: The German “Beer Act” violates the general prohibition of quantitative restrictions and measures having equivalent effects on imports according to Article 34 TFEU. Article 34 TFEU prohibits quantitative restrictions on imports and all measures having equivalent effect between Member States in order to ensure the free movement of goods and as an ultimate objective of the functioning of the internal market, unless they are proportionate justifications.
2 Definition of legal terms
Article 34 TFEU applies to intra-European Union trade between Member States and implies the four freedoms of the internal market, which is one of the most dominant objectives of the European Union (Streinz, 2012). The four freedoms are embedded in the European Economic Community (EEC) since 1957 and are the driving forces for the internal market (Hallstein, 1973, p. 47). The free movement of goods is one of the fundamental principles of the Treaty on the European Union (Article 23) and any form of direct discrimination and indirect discrimination to the fundamental freedoms are prohibited (Fulmini, 2007). In order to secure the functioning of the internal market, guaranteeing the four freedoms as primary law and thereby securing the general prohibition of discrimination in Article 18 TFEU, harmonization measures are made and Member States have to adjust their legislation accordingly without justified exemptions (Article 114 and 115 TFEU). “Member States” in Article 34 TFEU include all the authorities of a country and thereby apply to law-making, judicial, or administrative bodies of a Member State (European Commission, 2010). Article 34 TFEU prohibits quantitative restrictions and measures having equivalent effect on imported goods. Free movement of goods applies according to Article 28 (2) TFEU to “products originating in Member States and to products coming from third countries which are in free circulation in Member States”. Furthermore the ECJ describes goods as products which can be valued in money and which are capable, as such, of forming the subject of commercial transactions (ECJ, Case 07/68, Commission v Italy,1968 ECR 423) (Lenski, 2013). Moreover, quantitative restrictions are described as customs duties on imports and exports and further all charges having equivalent effect, non-customs duties but with similar effect, are also prohibited as they are obstacles of free trade among Member States (Article 28 (1) TFEU). Such directly discriminative national measures against the free movement of goods are quotas, custom duties and embargos on imports (Mayer, 2004). Measures having equivalent effect as quantitative restrictions are measures which are not directly discriminative and transparently visible like, for example, quantitative restrictions, but with similar effect to quantitative restrictions and therefore lead to the same result (Mayer, 2004). The treaty however, does not define the term “measure equivalent to a quantitative restriction (MEQR)” and therefore the ECJ further defined it in one of its cases. According to the Dassonville-Formula (ECJ, Case 08/74, Procureur du Roi v Dassonville1974 ECR 837), “all trading rules enacted by the Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are measures with similar effect to quantitative restrictions”. Such trading rules can be for example specific technical standards. Even though the Dassonville-Formula gives a definition of the MEQR and are therefore prohibited, the EJC implemented a restriction to it, in form of the Keck- judgment. According to the Keck-judgment, the Dassonville-Formula is not applicable for selling arrangements as long “as those provisions apply to all relevant traders operating within the national territory and so long as they affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States” (ECJ, Case 267/91 & 268/91, Keck Joined Cases1993 ECR I-6097). As a result, for any other cases, both quantitative restrictions and measures having equivalent effect are prohibited equally under Article 34 TFEU. Nevertheless, there can be possible exceptions and justifications, either provided by the TFEU (written justifications) or the ECJ’s case law (unwritten justifications) (Lenski, 2013). The treaty allows justification 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 or the protection of industrial and commercial property” (Article 36 TFEU). To further define and clarify the written justifications in Article 36 TFEU, the EJC implemented a broader justification to the MEQR with the Cassis-Formula. ”Obstacles to the free movement of goods must be accepted, when they are necessary to satisfy mandatory requirements relating in particular to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defence of the consumer” (ECJ, Case 120/78, Rewe Zentral AG v Bundesmonopolverwaltung für Branntwein (Cassis de Dijon Case)1979