Keck vs. Trailers: have certain selling arrangements been towed away?

Amanda Spalding

PhD Candidate at King’s College London

 

In the 1990s the European Court of Justice (ECJ) established a distinction between the product requirements and certain selling arrangements in the case of Keck and Mithouard.[1] A few years ago in Trailers[2] the ECJ declined to extend Keck to user arrangements and declared that a measure will be classified as a measure having equivalent effect to a quantitative restriction if it hinders access to the market. Though Keck has not been specifically overruled does this market access test mean that Keck has been abandoned? This post will examine whether the market access test has indeed overtaken the Keck certain selling arrangements exception or whether the tests actually deal with separate situations. There is an argument that the phrasing used in Trailers actually excluded product requirements and certain selling arrangements from the market access test.[3] It is also possible that the market access test only applies when the measure is discriminatory whereas certain selling arrangements only apply to indiscriminate measures.[4]  These arguments will be explained and critiqued here.

 

Pre-Keck

Before jumping straight into the Keck case it is necessary to give a bit of background as to why it was decided. As is well known, in the case of Dassonville[5] the ECJ defined a measure having equivalent effect to a quantitative restriction (MEQR) as ‘all trading rules enacted by member states which are capable of hindering directly or indirectly, actually or potentially intra-community trade.’ This is a very wide definition and a trend started with opponents of regulation attacking national rules in view of EU law compliance.  Thus Member State competence to impose any regulation was severely limited. A good example of this is the Sunday Trading case law which challenged the limits on Sunday trading hours imposed in the UK.[6] Eventually the ECJ declared that these rules could be justified by socio-cultural reasons but by that point the UK Parliament was already under huge pressure to change the law.

 

The Keck Case

The Keck case concerned traders selling goods at a loss which contravened French law. The traders argued that this prohibition restricted a method of sale promotion and so was a MEQR. The ECJ noted ‘the increasing tendency of traders to challenge national rules’ and drew a distinction between product requirements and certain selling arrangements (CSAs). Product requirements would always fall within the scope of EU law and have to be justified but CSAs.  So long as the CSAs applied equally to all traders in the national territory and had the same effect on all traders in law and in fact, fell outside the scope of the Treaty. This French prohibition was a CSA and so was not prohibited under EU law. The Keck case was applied again in Leclerc-Siplec[7] where the TV advertising of fuel distributors was prohibited and was found to be a CSA. After that Keck was not successfully used again in front of the ECJ[8] but more recently a body of case-law concerning ‘user arrangements’ came before the ECJ – where these certain selling arrangements?

 

User Arrangements

In the Trailers case an Italian rule prohibited motorcycles, mopeds, bicycles etc. from pulling trailers thus there was effectively a ban on a certain type of trailer. The ECJ found that the rule did not discriminate with regard to origin but in fact only imports were affected as no trailers were manufactured in Italy. The ECJ identified three situations where a rule could be regarded a MEQR.

1. Where the object/effect of the measure is to treat products from other member states less favourably than domestic products.
2. When a measure requires goods lawfully made in another member state to meet another condition even if it applies to all products indiscriminately.
3. Any other measure which hinders the access of products originating in other member states to the market.

The third situation applied here as the prohibition on the use of the product would have a big impact on consumer behaviour which will affect demand for the product. However this could be justified under the mandatory requirement of road safety.

A second user arrangement case emerged soon after. In Mickelsson and Roos[9] two people were caught riding jet skis on a body of water where the use of watercraft is prohibited by Swedish law. The ECJ did not even refer to Keck but went straight to the definition of a MEQR provided in the Trailers case. It found such a limitation would hinder access to the market as it would deter consumers from buying the product but it could be justified on the grounds of the protection of health and life of plants and animals and environmental protection.

 

Market Access vs. Keck

Though Keck has not been specifically overruled, has it been abandoned in favour of a market access test? Perhaps not as there is an argument that the phrasing used in Trailers exempts CSAs from the market access test.[10] The ECJ reiterates that discriminatory measures and product requirements are always prohibited by Article 34 and that CSAs are only prohibited in so far as they are discriminatory. Then the ECJ states ‘Any other measure which hinders the access of products originating in other Member States to the market of a Member State is also covered by that concept [MEQR]’ The phrase ‘any other measure’ is confusing, since it is not clear whether it refers to the a measure which is not a discriminatory measure, a product requirement or a CSA? Or does it refer to any non-discriminatory measure – including CSAs?

If it is the former situation, then the market access test may be said to apply to residual rules.  Residual rules are those rules which cannot be classed as a product requirement nor can they be considered product requirements but which affect the sale of a product.  Some examples are a requirement to report data, restrictions on the transport of the product and indeed prohibitions on the use of the product. However this reading of the judgement is not without its problems. The most prominent being that, given the nature of residual rules, it does not make much sense in the internal market. Why would the court exclude CSAs from the market access test when they are likely to have bigger impact on the sale of the product than a residual rule? CSAs govern where, when, how and to whom the product may be sold – factors far more likely to affect trade than a requirement to provide data. There is also a potential for overlap between CSAs and residual rules, for example a requirement not to sell cigarettes to under-18s would be both a CSA (to whom) and a residual rule (prohibition on use).

Another argument which suggests that Keck has not been abandoned is the idea that the market access test only applies when a measure is discriminatory.[11] In order for a CSA not to be caught by Article 34 TFEU it must fall equally on all traders in the national territory and affect the same in law and in fact – in other words it must not be discriminatory. If a measure is not discriminatory because it affects all traders equally then it surely follows that there is no market access problem. Any trader trying to break into the market faces the same obstacles as any other. This is a more convincing reading. Although this argument does not seem to stand up against the ECJ case law, a prohibition on trailers for mopeds, for example, would affect any company attempting to start such a business in Italy as well as those from other Member States. In other words it fell equally on all traders but there were simply no traders from Italy. Thus the discrimination distinction seems also to be problematic.

 

Conclusion

Has Keck been abandoned then? Maybe seems to be the only possible answer. This whole area of EU law has been encased in uncertainty for a long time. The refusal of the ECJ to clear up the situation seems bizarre given the obvious potential consequences for both member states and traders. The two explanations outlined above are not without their problems but their adoption by the ECJ would not be all that surprising. It would not be the first time the Court has engaged in strange and contradictory logic.[12] Until the Court chooses to clarify the situation however, traders and Member States will have to deal with the legal uncertainty.