Free Movement of Goods under Article 34 of TFEU
Date: 14 March 20222
Sarah Brown Food Products Ltd
ABC Street
I am writing this letter with regards to the problems faced by you in marketing your products in the other member states of the European Union. The following are the issues faced by you –
- Can you sell your products in Sweden, where products with artificial food preservatives are banned till 2025?
- Are the German laws prohibiting the use of garish green colours in products for sale valid?
- Is the French government’s decision to ban products showing any tricolour flags except the French tricolour valid?
- Is the Romanian government’s refusal of Brownco’s application valid under their 1950 decree?
The rules applicable to your case would be –
Treaty on the Functioning of the European Union 1958, art. 34
Treaty on the Functioning of the European Union 1958, art. 36
Treaty on the Functioning of the European Union 1958, art. 258
With regards to the sale of the products in Sweden, the problem being faced by your company is that the Swedish government has imposed a ban on products with artificial food preservatives till the year 2025 as a part of their national health campaign. Amongst the European member states, the principle of ‘free movement of goods’ is one of the primary principles that is shared mutually (Moberger, 2019). In accordance with this principle of free movement of goods, under article 34 of the Treaty on the Functioning of the European Union 1958 (TFEU), any kind of quantitative restrictions on import of goods is not allowed amongst the member states. Article 35 further restricts any quantitative restrictions on the export of goods amongst the member states as well. Any rules which put a restriction on the free movement of goods within the member state of the European Union are considered to be ‘measures’ under the meaning of the Treaty. However, article 36 allows for derogations from the restrictions imposed under the Treaty as long as the restrictions are in accordance with the grounds stated in article 36 of TFEU. One of the grounds that allow for the restrictions to be derogated from is that of protecting human health and life (Hojnik, 2021). In the case of Criminal Proceedings against Melkunie (1984), the court stated that the determination of the level of protection needed by the citizens of the State would be based on the discretion of the State. The member state can pass laws that are derogations from article 34 of the TFEU and are for the protection of health depending upon the condition of health of the citizens. However, the member state must be able to prove that the policy addresses a serious health concern, and thus the policy acts as a serious health regulation. In the Commission v. Germany (1987) case, the German government had imposed a ban on all types of beers that had different categories of additives on account of the protection of public health. The reasoning by the German government was that beer is commonly consumed by the German public and the unknown or unidentified nature of the additives was a threat to public health. Also, the court further stated that if there is uncertainty with regards to a certain product, the member state can take such steps to protect public health that does not interfere with the free movement of goods. Accordingly, as per the precedence set by the case, the ban on artificial preservatives cannot be justified as the intention of the ban is to prevent manufacturers from using artificial preservatives in the future after the ban ends in 2025. The national health campaign of Sweden puts a restriction on the free movement of goods without justifying if the ban can successfully prevent a major health problem amongst the Sweden population. Thus, the ban would be considered to be a violation of article 34 of TFEU. In accordance with the court’s judgment in Commission v. Germany (1987), the government can take actions that protect the health of the citizens from artificial preservatives without imposing a restriction on the free movement of goods.
Analysis of Applicable Rules
The second issue being faced is that of the German laws that prohibit the use of garish green products with the justification that such products have an unfair advantage against the local rival products on the shelves of the supermarkets because they create an impression that the ingredients of the products are organic. These restrictive regulations were placed under the consumer protection laws of Germany. Consumer protection has been considered to be a form of acceptable restriction under the distinct ‘mandatory requirements’ required by Article 36 of the TFEU (Abidini, 2020). However, in the case of Gut Springenheide GmbH v. Oberkreisdirektor des Kreises Steinfurt (1998), the court clarified and elaborated on the mandatory requirement of consumer protections. They are meant to be imposed for the ‘ reasonably well informed’ consumer. The consumer is also required to be cautious, wary and observant of the products they purchase in the market (Abidini, 2020). The mandatory requirement of consumer protection is not intended for the unobservant consumer. In accordance with the ruling of the European Court of Justice in the Cassis de Dijon case (1979), it is evident that restrictions or bans cannot be placed on products under the purview of consumer protection when the consumer can be protected through the means of appropriate labelling requirements. Adequate labelling requirements can help the consumer in developing a strong understanding of the ingredients of the product, and the label of the product should be required to meet certain language and consumer understanding requirements (Abidini, 2020). Therefore, as per the judgment of the Cassis de Dijon case (1979), when the consumer can be protected through various other means besides placing a ban on the product, the same should be ensured by the Member State, and a violation of Article 34 of the TFEU would not be justified under such a scenario. Also, in the Clinique case (1994), the German government required the products of the cosmetic brand Clinique to be sold under the name ‘Linique’, so that consumers would not be misled or confused. The argument of the German government was that the name of the product could be misunderstood by the customer as that of a medicinal product. However, the European Court of Justice rejected this argument and considered the restriction on the brand’s name to be invalid because the products of the brand were sold in the other Member States as well, and the consumers in the other Member States were not misled by the name of the brand Clinique. In accordance with the judgment of the court in the Clinique case (1994), the government’s restriction on products with garish green colours would also be considered invalid as it has not been a source of confusion for consumers of other states and has not misled the consumers into believing the products are organic. Furthermore, consumers can also be protected by meeting the requirements of adequate labelling in the appropriate language as suggested by the European Court of Justice in the Cassis de Dijon case (1979). Therefore, the prohibition placed by the German government is unjustified, and Brownco’s products can be labelled adequately so that the observant consumer is not misled.
Restrictions on Products under Consumer Protection
The third issue was faced in marketing Brownco’s products in France. This was because of the Irish tricolour flag on the packaging of the products, while the French government had to invoke emergency powers for banning products that did not display the French tricolour, so that national security could be safeguarded. The French government’s derogation from article 34 can be justified under Article 36 as it was considered by the government to be a measure for the protection of ‘public security’. The threat is required to be one that can fundamentally impact an important interest of the nation’s citizens and their security (Hojnik, 2021). However, in the case of Commission v France (1995), the ECJ also emphasized the duty of the government of the Member State in actively ensuring the cooperation of the government with the provisions of article 34 of TFEU. In this case, the government failed to act as per the provisions of article 258 of TFEU by failing to protect the Spanish strawberries and products from other Member states that were destroyed by French Farmers. The ECJ stated that while it is important for nations to uphold the provisions of article 34 and not create unnecessary restrictions on the free movement of goods, it is also important for nations to ensure all necessary measures are undertaken to protect the free movement of goods within the nation. Any obstacles that hinder the free movement of goods must be efficiently managed by the member states in accordance with the requirements under article 258 of TFEU. The government can be held responsible for the violence and disturbance caused by the infringements of article 34 by private citizens of the State. Therefore, Brownco may challenge the provisions of the French government’s regulations banning the use of other tricolour flags under article 258 of TFEU. The French government must take adequate measures to ensure private citizens do not violate the provision of free movement of goods under TFEU and protect the goods of other member states that display their respective tricolour flags, such as that of Brownco’s.
The fourth issue was because of the Romanian government’s refusal to accept the applications of non-Romanian stand holders for the food convention. The Romanian government justifies their rejection of Brownco’s application by stating that either non-Nationals must have a registered subsidiary in Romania or a registered Romanian company. As Brownco did not fulfil any of these criteria, the Romanian government was able to reject the company’s application. However, this would constitute as a barrier to the free movement of goods and can be considered as a measure having an equivalent effect in relation to the free movement of goods. This does not directly prohibit goods from competing within the market of the Member State but requires the product to fulfil certain requirements and thus indirectly prevents the product from being sold in the member state (Abidini, 2020). Therefore, requiring the stand holders from the member states to have a subsidiary that is registered in Romania or a branch operating in Romania counts as an equivalent measure as it prohibits standholders from many states from being able to operate at the food convention. At the same time, the protection of national security is important for any nation and can be used as a measure under article 36, if it is absolutely necessary and suitable in the situation in accordance with the principle of proportionality (Abidini, 2020). Besides this, any measure should not create arbitrary discrimination between the local businesses of the member state and other businesses of other member states of the EU (Abidini, 2020). However, the Romanian government’s choice to restrict non-member state companies from acting as stand holders in the event reflects a disproportionate measure as Brownco does not pose any form of security threat to the Romanian government. Brownco has not been banned in any of the other member states on account of security reasons, and thus it would be unjustified to reject the organization’s application. Besides this, the 1950 decree of Romania also creates arbitrary discrimination against companies and businesses that do not have a subsidiary or branch registered in Romania. Thus, on such grounds, Romania’s rejection of the application can also be challenged by Brownco.
In conclusion, it is advisable for your company to challenge the restrictions imposed by the Swedish, German, French and Romanian governments. Member States within the EU act as per the principle of the ‘free movement of goods’, and reasoning provided by the governments of the various member states are not justified under article 36 of TFEU or in accordance with any of the precedence set by the ECJ. Please let me know if you require any further help in challenging the restrictions imposed by the concerned member states of the EU on your products.
References
Abidini, N., 2020, ‘Free Movement of Goods – Justifying Restrictions under the Derogations listed in Art. 36 TFEU and the Mandatory Requirements’, LUP, accessed 15 March 2022, < https://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=9014319&fileOId=9014326>
Cassis de Dijon (1979) Case C-120/78
Commission v France (1997) C-265/95
Commission v. Germany [1987] Case C-178/84
Criminal Proceedings against Melkunie [1984] Case 97/83
Gut Springenheide GmbH v. Oberkreisdirektor des Kreises Steinfurt [1998] Case C-210/96
Hojnik, J., 2021, ‘Article 36 [Derogations]’, In Treaty on the Functioning of the European Union-A Commentary (pp. 787-812), Springer, Cham
Moberger, E., 2019, ‘Free Movement of Goods’, accessed 16 March 2022, < https://www.diva-portal.se/smash/get/diva2:1352036/FULLTEXT01.pdf>
Treaty on the Functioning of the European Union 1958
Verband Sozialer Wettbewerb ev v. Clinique Laboratories SNC [1994] Case C-315/92
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