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RESTRICTING RESTRICTIONS: LESSONS FOR THE EU FROM THE US?

Published online by Cambridge University Press:  16 December 2009

Catherine Barnard
Catherine Barnard
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Trinity College, Cambridge.
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The Cambridge Law Journal , Volume 68 , Issue 3 , November 2009 , pp. 575 - 606
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Copyright © Cambridge Law Journal and Contributors 2009

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References

1 Case C-55/93 Criminal Proceedings against van Schaik [1994] E.C.R I-4837; Joined Cases C-151/04 and C-152/04 Nadin [2005] E.C.R I-11203, para. [49].

2 Cf. Justice Holmes in Louiseville Gas & Electric Co. v. Coleman 277 US 32, 41 (1938) “When a legal distinction is determined, as no one doubts that it may be between night and day, childhood and maturity, or any other extremes, a point has to be fixed or a line has to be drawn, or gradually picked out by successive decisions, to mark where the change takes place. Looked at by itself, without regard to the necessity behind it, the line or point seems arbitrary. It might as well or nearly as well be a little more to one side or the other. But when it is seen that a line or point there must be, and that there is no mathematical or logical way of fixing it precisely, the decision of the legislature must be accepted unless we can say that it is very wide of any reasonable mark.” In the EU context the ECJ said in Case C-110/05 Commission v. Italy (Italian trailers) [2009] E.C.R I-000, para. [67] “Member States cannot be denied the possibility of attaining an objective such as road safety by the introduction of general and simple rules which will be easily understood and applied by drivers and easily managed and supervised by the competent authorities”.

3 Case 279/80 Criminal Proceedings against Webb [1981] E.C.R 3305, para. [19]; Joined Cases 62 & 63/81 Seco v. EVI [1982] E.C.R 223, para. [14]; Case C-113/89 Rush Portuguesa [1990] E.C.R I-1417, para. [18].

4 Case C-464/02 Commission v. Denmark (company vehicles) [2005] E.C.R. I-7929, para. [45], citing the free movement of capital decision in Case C-319/02 Manninen [2004] E.C.R. I-7477, para. [49].

5 Case C-109/04 Kranemann v. Land Nordrhein-Westfalen [2005] E.C.R. I-2421.

6 Case C-341/05 Laval un Partneri Ltd v. Svenska Byggnadsarbetareförbundet [2007] E.C.R I-11767.

7 Case C-438/05 International Transport Workers' Federation and Finnish Seamen's Union v. Viking Line [2007] E.C.R I-10779.

8 Viking, para [79]; Laval, para [105]. For a full discussion of these cases see (2007–8) 10 C.Y.E.L.S. chs17-22.

9 See Diamond, P., “Dishonourable Defence: the Use of Injunctions and the EEC Treaty; Case Study of the Shops Act 1950” (1991) 54 M.L.R. 72CrossRefGoogle Scholar; Rawlings, R., “The Euro-law Game: Some Deductions from a Saga” (1993) 20 J. Law and Soc. 309CrossRefGoogle Scholar.

10 Cf. Northcote J. in B & Q v. Shrewsbury and Atcham BC [1990] 3 C.M.L.R. 535 and Hoffmann J. in Stoke on Trent City Council v. B & Q [1990] 3 C.M.L.R. 31 with Allen J. in Wellingborough BC v. Payless [1990] 1 C.M.L.R. 773 and Mustill J. in Smiths-do-it-all v. Peterborough BC [1990] 2 C.M.L.R. 577.

11 Joined Cases C-267/91 and C-268/91 Keck and Vithouard [1993] E.C.R I-6097.

12 Case C-110/05 Commission v. Italy (Italian trailers) [2009] E.C.R I-000.

13 This terminology is derived from Young, E., “Protecting Member State Autonomy in the European Union: Some Cautionary Tales from American Federalism” (2002) 77 N.Y.U. Law Rev. 1612Google Scholar.

14 See, in particular, Bermann, G., “Taking Subsidiarity Seriously: Federalism in the European Community and the United States” (1994) 94 Columb. L. Rev. 331CrossRefGoogle Scholar; and “Proportionality and Subsidiarity” in C. Barnard and J. Scott (eds.), The Law of the Single European Market: Unpacking the Premises, (Oxford 2002).

15 Cf. in the US context where the Supreme Court declared that “State sovereign interests are more properly protected by procedural safeguards inherent in the structure of the federal system than by judicially created limitations on federal power”: Garcia v. San Antonio Metropolitan Transit Authority 469 US 528, 552 (1985). See also the classic, but contested, work of Wechsler, H., “The Political Safeguards of Federalism: the Role of the States in the Composition and Selection of the National Government” (1954) 54 Columb. L. Rev. 543CrossRefGoogle Scholar.

16 Of course, the Court's decisions in this area do have an impact on the reverse issue of Community competence to act: any area of Member State regulation falling under one of the four freedoms becomes fair game for harmonisation under Article 95 EC. See e.g. Snell, J. “Who's Got the Power? Free Movement and Allocation of Competence in EC Law” (2003) 22 Y.E.L. 323Google Scholar; Davies, G., “Can Selling Arrangements be Harmonised?” (2005) 30 E. L. Rev. 370Google Scholar.

17 See D. Kommers and M. Waelbroeck, “Legal Integration and the Free Movement of Goods: The American and European Experience”, in M. Cappelletti, M. Seccombe and J. Weiler (eds.) Integration Through Law, vol. 1, book 3, (Berlin 1986): “The American federal experience seems particularly relevant to the European enterprise in light of the judiciary's contribution to the promotion of legal integration in the United States”.

18 Of course the “F” word is a controversial term to be applied to the EU. Here, I use it in its most neutral sense to describe a situation where “a society seeks to divide power between a central government and its component units”: Young, E., “Protecting Member State Autonomy in the European Union: Some Cautionary Tales from American Federalism” (2002) 77 N.Y.U. Law Rev. 1612, 1614Google Scholar. K. Lenaerts describes federalism as whenever a “divided sovereign is guaranteed by a national or supra-national constitution and umpired by the supreme court of the common legal order” (“Constitutionalism and the Many Faces of Federalism” (1990) 38 Am. J. Comp.L. 205, 263.

19 See Justice Jackson's views in Hood & Sons v. DuMond, 336 US 525, 539 (1949): the Commerce Clause embodies “the principle that our economic unit is the Nation”, a “federal free trade unit”. He continued: “Our system, fostered by the Commerce Clause, is that every farmer and every craftsman shall be encouraged to produce by the very certainty that he will have free access to every market in the Nation, that no embargoes will withhold his exports, and no foreign state will by customs duties or regulations exclude them. Likewise, every consumer may look to the free competition from every producing area in the Nation to protect him from exploitation by any.”

20 There is already a wealth of literature on this. For a starting point, see K. Nicolaidis and R. Howse (eds.), The Federal Vision: Legitimacy and Levels of Government in the United States and the European Union (Oxford 2001) including their introductory essay.

21 M. Poiares Maduro, We the Court: The European Court of Justice and the European Economic Constitution (Oxford 1998), 88.

22 Halberstam, D., “Of Power and Responsibility: The Political Morality of Federal Systems” (2004) 90 Virginia Law Rev. 731, 810CrossRefGoogle Scholar: “the Court usually pursues only the anti-discrimination enquiry even when it purports to be doing more”.

23 Furthermore, because Congress has the power “to permit the states to regulate in a manner which would otherwise not be permissible” (per Chief Justice Stone in Southern Pacific Co. v. Arizona, ex rel Sullivan 325 US 761, 769 (1945)), a situation which is not permitted under EC law where the four freedoms apply equally to Community as well as to Member States measures (Case 15/83 Denkavit Nederland v. Hoofdproduktschap voor Akkerbouwprodukten [1984] E.C.R. 2171, para. [15]; Case C-51/93 Meyhui v. Schott Zwiesel Glaswerke [1994] E.C.R. I-3879, para. [11]), more attention is focused in the US on the political than the judicial level for resolving difficulties in inter-state commerce.

24 Pfander, J., “Member State Liability and Constitutional Change in the United States and Europe” (2003) Am. J. Comp. L. 237, 239CrossRefGoogle Scholar.

25 Ibid, 261. As Young notes (above n.13, 1705), “To an American observer, the European Union looks a great deal like the American Articles of Confederation [Agreed to by Congress November 15, 1777; ratified and in force, March 1, 1781]. In particular, the central government during the Confederation period depended upon the constituent states for revenue and for enforcement of Congressional mandates”.

26 Above n.21, 88.

27 See e.g. Case 178/84 Commission v. Germany [1987] E.C.R. 1227 concerning the sixteenth century beer purity laws.

28 For example, in its White Paper on Social Policy (COM(94) 333, para. [3]) the Commission said that the “European Social Model” was based around certain shared values: “These include democracy and individual rights, free collective bargaining, the market economy, equality of opportunity for all and social welfare and solidarity” The German Lisbon Treaty decision BVerfG, 2BvE 2/08 of 30 June 2009, paras 249 and 259 would support the need for space for local action in the social field.

29 Young, above n.13, 1667.

30 M. Poiares Maduro, We the Court: The European Court of Justice and the European Economic Constitution (Oxford 1998), 59.

31 The Fourteenth Amendment provides: “nor shall any State deprive any person of life, liberty, or property, without due process of law … ”. The Fifth Amendment is drafted in similar terms but applies to the Federal government.

32 West Coast Hotel v. Parrish 300 US 379 (1937). Cf. Tushnet, M., “Rethinking the Dormant Commerce Clause” (1979) Wisc. L. Rev. 125, 145–150Google Scholar, who argues that due process review has re-entered “through the back door of the balancing test under the dormant commerce clause”.

33 348 US 483 (1955).

34 348 US 483, 488.

35 Joined Cases C-64-65/96 Uecker and Jacquet [1997] E.C.R. I-3171, para. [23]. This has been confirmed in Case C-212/06 Government of the French Community and Walloon Government v. Flemish Government [2008] E.C.R. I-1683, para. [38]. For a full discussion, see A. Tryfonidou, “The Outer Limits of Article 28 EC: Purely Internal Situations and the Development of the Court's Approach Through the Years”. in C. Barnard and O. Odudu (eds.), The Outer Limits of EU Law (Oxford 2009).

36 At times it does come close to doing just this, especially when the rule under review is being challenged by a national of that state; e.g. Joined Cases C-321-4/94 Pistre [1997] E.C.R. I-2343. For criticism, see Oliver, P. and Enchelmaier, S., “Free Movement of Goods: Recent Developments in the Case Law” (2007) 44 C.M.L.Rev. 649Google Scholar.

37 For a recent important example of this point, see Case C-507/03 Commission v. Ireland [2007] E.C.R. I-9777, para. [34].

38 Regan, D., “The Supreme Court and State Protectionism: Making Sense of the Dormant Commerce Clause” (1985) 84 Mich. L. Rev. 1091, 1113CrossRefGoogle Scholar.

39 See also Case C-184/99 Grzelczyk [2001] E.C.R. I-6193, para. [44] discussed in C. Barnard, “Solidarity and New Governance in the Field of Social Policy?” in G. De Búrca and J. Scott (eds.) New Governance and Constitutionalism in Europe and the US (Oxford 2006). In the US context see Justice Jackson's comments in H.P. Hood & Sons v. Du Mond 336 US 525, 535 (1949): “this Court has advanced the solidarity and prosperity of this Nation by the meaning it has given to these great silences of the Constitution” i.e. the recognition of the Dormant Commerce Clause.

40 Regan, above n.38, 1114.

41 Regan, above n.38, 1118.

42 See Justice Stone in South Carolina State Highway Department v. Barnwell Bros., Inc 230 US 177 (1938): “Underlying the stated rule has been the thought … that when regulation is of such a character that its burden falls principally upon those without the state, legislative action is not likely to be subjected to those political restraints which are normally exerted on state legislation where it affects adversely some interests within the state”.

43 This is sometimes referred to as the Carolene Products theory, taken from Justice Stone's opinion of the Court in US v. Carolene Products Co. 304 US 144 and, in particular, the famous “footnote 4”.

44 Tushnet, M., “Rethinking the Dormant Commerce Clause” (1979) Wisc. L. Rev. 125, 150Google Scholar.

45 This phrase is taken from the classic work by J. Ely, Democracy and Distrust: A Theory of Judicial Review, (Boston 1980).

46 See e.g. Minnesota v. Clover Leaf Creamery 449 US 456, 473 (1981). On the other hand, because the consumer voice is dispersed it cannot compete with the power of industry which can mobilise lobbyists to push for discriminatory legislation: see L. Tribe, American Constitutional Law (New York 2000), 1057.

47 Halberstam, D., “Of Power and Responsibility: The Political Morality of Federal Systems” (2004) 90 Virginia Law Rev. 731, 732–3CrossRefGoogle Scholar.

48 Ibid, 734.

49 For a general discussion of this provision see, in particular, Temple Lang, J., “The Duties of National Authorities under Community Constitutional Law” (1998) 23 E. L Rev. 109Google Scholar and “Community Constitutional Law: Article 5 [10] EEC” (1990) 27 C.M.L.R. 645.

50 Bernard, N., “Discrimination and Free Movement in EC Law” (1996) 45 I.C.L.Q. 82, 103CrossRefGoogle Scholar.

51 Case C-415/93 Union Royale Belge de Société de Football Association v. Bosman [1995] E.C.R. I-4921.

52 Case C-140/03 Commission v. Greece (opticians) [2005] E.C.R I-3177.

53 For a well-known discussion of this argument in the context of sex and race discrimination law, see Westen, P., “The Empty Idea of Equality” (1982) 95 Harvard Law Review 537CrossRefGoogle Scholar. In the context of free movement, see Wilsher, D., “Does Keck Discrimination make any Sense? An Assessment of the Non-Discrimination Principle within the European Single Market” (2008) 33 E. L. Rev. 3Google Scholar.

54 See e.g. Case 270/83 Commission v. France (tax credits) [1986] E.C.R 273. France granted tax credits to shareholders receiving dividends from a company with a registered office in France but not to those with only a branch or agency in France (and a registered office in another Member State). By applying the principle of equal treatment to this situation the Court required the French tax system to treat a branch or agency having no legal personality in the same way as a company registered in France. If, as Banks notes (K. Banks, “The application of the fundamental freedoms to Member State tax measures: guarding against protectionism or second-guessing national policy choices” (2008) 33 ELRev. 482, 488) the Court had selected the treatment of a branch or agency of a nationally based company as the appropriate comparator, the outcome might have been different.

55 For a US example, see Camps Newfound/Owatonna Inc. v. Town of Harrison 117 S.Ct 1590 (1997) discussed in O'Grady, C., “Targeting State Protectionism Instead of Interstate Discrimination Under the Dormant Commerce Clause” (1997) 34 San Diego L. Rev. 571, 589–591Google Scholar.

56 Cf. Case C-288/89 Stichting Collectieve Antennevoorziening Gouda v. Commissariaat voor de Media [1991] E.C.R I-4007 (discrimination based on the fact that the service provider is established in another Member State is direct discrimination) cf. Case 39/75 Coenen v. The Sociaal-Economische Raad [1975] E.C.R 1547 (when the national rule is drafted in terms of requiring a service provider to be established and/or to have a residence in the host State this is indirectly discriminatory on the ground of nationality). See Case C-237/94 O'Flynn [1996] E.C.R. I-2617 para. 18 for a very broad definition of indirect discrimination.

57 The Constitution does, however, explicitly limit interference with foreign commerce: Art. 1 section 10, cl.2.

58 Tribe, above n.46, 1029 citing HP Hood & Sons Inc v. Du Mond 336 US 525, 535 (1949).

59 Gibbons v. Ogden 22 US (9 Wheat.) 1 (1824); cf. Tribe, above n.46, 1030 citing Colley v. Board of Wardens 53 US (12 How) 299, 318 (1852).

60 See e.g. United Haulers Association, Inc v. Oneida-Herkimer Solid Waste Management Authority et al. 127 S.Ct 1786, 1792–3.

61 This usage is adopted by those who oppose its existence: see e.g. Scalia J's dissent in Wyoming v, Oklahoma 502 US 437, 461.

62 Wyoming v. Oklahoma 502 US 437, 454–55.

63 His approach is based on “textualism and originalism”: S. Sachse, “United we Stand – but for How Long? Justice Scalia and New Developments of the Dormant Commerce Clause” (1999) 43 St. Louis U. L. J. 695, 703 citing Scalia J's remarks in Tyler Pipe Indus. v. Washington State Dept. of Revenue 483 US 232, 263 (1987), “historical record provides no grounds for reading the Commerce Clause to be other than what it says – an authorization for Congress to regulate commerce.” See also the analysis of Justice Scalia's contribution in Day, D., “The Rehnquist Court and the Dormant Commerce Clause: The Unsettling of ‘Well Settled Principles’” (1990–1) 22 U. Tol. L. Rev. 675Google Scholar. Chief Justice Rehnquist himself has also shown some support for their concerns: Kassel v. Consolidated Freightways 450 US 662, 689–90 (1981), considered below n.92. See also Chen, J., “A Vision Softly Creeping: Congressional Acquiescence and the Dormant Commerce Clause” (2003–4) 88 Minn. L. Rev. 1764, 1767–8Google Scholar.

64 Sachse, above n.63, 708. See especially Camps Newfound/Owatonna Inc. v. Town of Harrison 117 S.Ct 1590 (1997).

65 J. Larsen, “Discrimination in the Dormant Commerce Clause” (2003–4) 49 S. D. L. Rev. 844, 859 suggests that there might be a third category – purposeful discrimination (i.e. the situation where the purpose behind the statute is discriminatory, citing Kassel v. Consolidated Freightways Corp. 450 US 662, 678–79 although cf. discussion below at n.92ff but she admits that it is less used because it is difficult to find evidence of purpose or motive.

66 Hughes v. Oklahoma, 441 US 322, 337 (1979), 337. Discrimination under the dormant commerce clause nevertheless attracts a less demanding strict scrutiny test than under the Equal Protection and Due Process doctrines: Grutter v. Bollinger 123 S.Ct 2325, 2336 (2003) (equal protection) and Reno v. Flores 507 US 292, 302 (1993) (due process) both of which require a “compelling state interest” and that the statute be “narrowly tailored” to promote that government interest: J. Larsen, above n.65, 850.

67 Both limbs are required: City of Philadelphia v. New Jersey, 437 US 617, 626 (1978) because “the evil of protectionism can reside in legislative means as well as legislative ends”.

68 Chemical Waste Management Inc v. Hunt 504 US 334, 342–3 (1992) (higher fee for disposal of out-of-state waste than in-state waste). See also New Energy Company of Indiana v. Limbach 486 US 269.

69 One, possibly the only, example is Maine v. Taylor 477 US 131 (1986) where the Supreme Court upheld a law which prohibited the import of live baitfish to protect the state's waters from foreign species and parasites which may have affected the native population. As with the ECJ in Case C-67/97 Bluhme [1998] E.C.R I-8033, the Supreme Court upheld the state interest in protecting the environment from non-native species as legitimate and found no less discriminatory alternatives (but cf. Stevens J's dissent).

70 West Lynn Creamery Inc v. Healy, 512 US 186, 192 (1984) “state statutes that clearly discriminate against interstate commerce are routinely struck down … unless discrimination is demonstrably justified by a valid factor unrelated to economic protectionism”.

71 Oregon Waste Systems Inc v. Dept of Environmental Quality, 511 US 93, 99 (1994) “if a restriction on commerce is discriminatory, it is virtually per se invalid”, repeated more recently in Granholm v. Heald 544 US 460, 476 (2005).

72 Wyoming v. Oklahoma 502 US 437, 454–5 (1992). See O'Grady, above n.55, 571 who strongly advocates a protectionist reading of the dormant commerce clause rather than a discriminatory one. See also C. Hilson, “Discrimination in Community Free Movement Law” (1999) 24 E.L. Rev. 445.

73 Dean Milk v Madison 340 US 349 (1951). See also Wyoming v. Oklahoma 502 US 437 requiring Oklahoma coal fired electric generating plants producing power for sale in Oklahoma to burn a mix of coal containing at least 10% Oklahoma mined coal. The US Supreme Court said the Act discriminated both on its face and practical effect and could not be justified.

74 Pike v. Bruce Church Inc 397 US 137 (1970) discussed in Haibach, G., “The Interpretation of Article 30 of the EC Treaty and the ‘Dormant’ Commerce Clause by the European Court of Justice and the US Supreme Court” (1999) 48 I.C.L.Q. 155, 163CrossRefGoogle Scholar.

75 Emphasis added. In respect of taxation cases, the Supreme Court in Complete Auto Transit v. Brady 430 US 274 (1977) laid down a four pronged test to evaluate state taxes (at p.279): the Court will “sustain a tax against Commerce clause challenge when the tax [1] is applied to an activity with a substantial nexus with the taxing state, [2] is fairly apportioned, [3] does not discriminate against interstate commerce, and [4] is fairly related to the services provided by the State”.

76 V. Blasi, “Constitutional Limitations on the Power of States to Regulate the Movement of Goods in Interstate Commerce” in T. Sandalow and E. Stein, Courts and Free Markets: Perspectives from the United States and Europe (Oxford 1982), 186–7. See also Henkin, L., “Infallibility under Law: Constitutional Balancing” (1978) 78 Columb. L. Rev. 1022, 1040CrossRefGoogle Scholar.

77 D. Day, “Revisiting Pike. The Origins of the Non-Discrimination Tier of the Dormant Commerce Clause” (2004) 27 Hamline L. Rev. 46, 56.

78 The facts of Pike do not seem to support a finding of non-discrimination: Arizona state officials could refuse to allow fruit and vegetables to be taken out of the state for packaging. However, the outcome of unconstitutionality would have been the same in the EU: the Supreme Court found that the state interest in preserving the reputation of local products by ensuring they were not sold in substandard packaging was “minimal at best” and was outweighed by the burden on inter-state commerce.

79 Regan, D., “The Supreme Court and State Protectionism: Making Sense of the Dormant Commerce Clause” (1985) 84 Mich. L. Rev. 1091CrossRefGoogle Scholar. He argues that the Court rightly has been exclusively concerned with preventing states from engaging in purposeful economic protectionism, which he defines to mean (1) the statute was adopted for the purpose of improving the competitive position of local economic actors, just because they are local, vis-à-vis their foreign competitors; and (2) the statute is analogous in form to the traditional instruments of protectionism (the tariff, quota or embargo).

80 Case 120/78 Cassis de Dijon [1979] E.C.R 649.

81 Case C-76/90 [1991] E.C.R. I-4221.

82 Cf. D. Geradin, “Free Trade and Environmental Protection in an Integrated Market: A Survey of the Case Law of the United States Supreme Court and the Court of Justice” (1993) 2 J. Transnat'l L. & Policy 141, 191, citing Case 302/86 Commission v Denmark [1988] E.C.R 4607, 4629.

83 It used to be thought that the mandatory requirements and Art. 30 derogations operated differently. If a national measure could be justified by a mandatory requirement then it did not breach Art. 28. This comes closer to a genuine balancing. If, on the other hand, the national measures could not be justified then there was a breach of Art. 28 and the Member State could in principle have recourse to the derogations in Art. 30 (see, e.g. Case 25/88 Criminal Proceedings against Bouchara [1989] E.C.R 1105, para. [11], and Case 298/87 Smanor [1988] E.C.R 4489, para. [15]). However, the Court no longer makes the distinction between mandatory requirements and Art. 30 derogations, simply saying that once a breach can be established, the national measure can be justified under both Art. 30 and the mandatory requirements (see e.g. Joined Cases C-34-36/95 De Agostini [1997] E.C.R I-3843, para.45).

84 341 US 622 (1951). cf in the EU context Case 382/87 Buet [1989] E.C.R. 1235.

85 Ibid, 638.

86 Ibid, 641.

87 362 US 440 (1960).

88 Ibid, 448.

89 362 US 440, 443–4 (1960).

90 See also Southern Pacific v. Arizona 325 US 761, “in the absence of conflicting legislation by Congress, there is a residuum of power in the state to make laws governing matters of local concern which nevertheless in some measure affect interstate commerce or even, to some extent, regulate it”.

91 Sachse, n.63, above, 704, citing Morrison v. Olson 487 US 654 (1988). See also Justice Scalia's views in CTS Corporation v. Dynamic Corporation of America 481 US 69, 95 (1987) Pike-style balancing is “ill-suited to the judicial function and should be undertaken rarely, if at all”. In Benedix Autolite Corp. v. Midwesco Enterprises 486 US 888, 897 (1988) he said “the scale analogy is not really appropriate, since the interests on both sides are incommensurate. It is more like judging whether a particular line is longer than a particular rock is heavy”. All he would require is that “the state regulation does not facially discriminate against inter-state commerce”: American Trucking Associations Inc v. Scheiner 483 US 266, 304.

92 450 US 662 (1981).

93 Ibid, 691.

94 Ibid, 692.

95 Ibid, 670–1.

96 Ibid, 673.

97 Ibid, 680–1.

98 509 F.2d 69 (7th circ).

99 Ibid, 72.

100 Ibid, 76, emphasis added.

101 Cf. Case 167/73 Commission v. France [1974] E.C.R 353, paras. [44] and [45] “Article [39 (2)] entails the abolition of any discrimination based on nationality … the absolute nature of this prohibition, moreover, has the effect of not only allowing in each state equal access to employment to the nationals of other member states, but also … of guaranteeing to the state's own nationals that they shall not suffer the unfavourable consequences which could result from the offer or acceptance by nationals of other member states of conditions of employment or remuneration less advantageous than those obtaining under national law, since such acceptance is prohibited.

102 Case C-442/02 Caixa-Bank v. Ministère de l'Économie, des Finances et de l'Industrie [2004] E.C.R. I-8961, para. [63].

103 See e.g. Article 39(2) provides that freedom of movement of workers “shall entail the abolition of any discrimination based on nationality between workers of the Member States”; Article 43(2) talks of freedom of establishment which occurs “under the conditions laid down for its own nationals by the law of the country where such establishment is effected”; Article 50(2) provides that the person providing a service may temporarily pursue his activity in the host state “under the same conditions as are imposed by the State on its own nationals”. In the field of tax, Art. 90(1) is also drafted in the language of discrimination: “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.”

104 Case C-76/90 [1991] E.C.R I-4221, para. [12], emphasis added.

105 The “restriction” or “obstacle” language is also reflected in the Treaty e.g. Articles 43 and 49 EC and the original Article 67 EEC talk not only of discrimination but of the progressive abolition of “restrictions” on free movement. Further, Article 3(c) EEC referred to “the abolition, as between Member States, of obstacles to freedom of movement for persons services and capital”. The language of restrictions also pervades the free movement of goods. Articles 28 and 29 EC prohibit “Quantitative restrictions” on imports and exports and all measures having equivalent effect. Unlike the Treaty provisions on persons and capital, no reference is made to discrimination in these Treaty provisions.

106 Para. [15].

107 See e.g. L. Daniele, “Non-discriminatory Restrictions to the Free Movement of Persons” (1997) 22 E. L. Rev. 191.

108 Case C-464/02 Commission v. Denmark (company vehicles) [2005] E.C.R I-7929, para. [45] (emphasis added).

109 Case C-19/92 Kraus [1993] E.C.R I-1663, para. [32]; Case C-55/94 Gebhard [1995] E.C.R I-4165, para. [37].

110 Case C-367/98 Commission v. Portugal [2002] E.C.R I-4731, paras [44–5].

111 Case C-192/05 Tas-Hagen v. Raadskamer WUBO van de Pensioen- en Uitkeringsrad [2006] E.C.R I-10451, paras. 30–31.

112 Case 8/74 Procureur du Roi v. Dassonville [1974] E.C.R 837, para. [5], emphasis added.

113 Case 120/78 Rewe Zentrale v. Bundesmonopolverwaltung für Branntwein (“Cassis de Dijon”) [1979] E.C.R 649.

114 Case C-110/05 Commission v. Italy (trailers) [2009] E.C.R I-000, para. [37].

115 Eg Case 4/75 Rewe-Zentralfinanz GmbH v. Landwirtschaftskammer [1975] E.C.R. 843, (phytosanitary inspections of imported apples to control the spread of the apple disease San José scale breached Article 28).

116 E.g. Case 45/87 Commission v. Ireland (Dundalk Water) [1988] E.C.R. 4929.

117 This is the classic Cassis de Dijon situation concerning host state rules relating to designation, form, size, weight, composition, presentation, labelling, packaging Joined Cases C-267 & 268/91 Keck [1993] E.C.R. I-6097, para. [15].

118 Para. [56]. The test has passionate supporters among the AGs: e.g. AG Bot in Case C-110/05 Commission v. Italy [2009] E.C.R I-000, para. [136]. See also AG Geelhoed in Case C-239/02 Douwe Egberts NV v. Westrom Pharma NV [2004] E.C.R. I-7007, para. [72].

119 P. Oliver and S. Enchelmaier, “Free Movement of Goods: Recent Developments in the Case Law” (2007) 44 C.M.L.Rev. 649, 674.

120 “Fron Gebhard to Carpenter: towards a (non-)economic European Constitution” (2004) 41 C.M.LRev. 743, 757–8. See also C. Barnard and S. Deakin, “Market Access and Regulatory Competition”, in C. Barnard and J. Scott (eds.), The Legal Foundations of the Single Market: Unpacking the Premises, (Oxford 2002).

121 Citing F.E. Foldvary, Dictionary of Free Market Economics, (Cheltenham 1998), 48.

122 Case C-98/01 Commission v. UK [2003] E.C.R I-4641.

123 Para. [44].

124 Para. [47], emphasis added.

125 Para. [28].

126 See also A. Rosas, “Dassonville and Cassis de Dijon” in M. Poiares Maduro and L. Azoulai (eds.), The Past and Future of EU Law: The Classics of EU Law Revisited on the 50th Anniversary of the Rome Treaty (Oxford 2009 forthcoming): “According to a somewhat cynical view, the circumstances of each case lead to a certain solution ‘by instinct’, which implies that the Court would by and large have arrived at the same result regardless of the conceptual tools chosen'.

127 J. Snell, “The Notion of Market Access: A Concept or a Slogan?”, paper delivered at CELS/UCL seminar on June 30 and July 1, 2009 on “The regulation of trade in services: trust, distrust and economic integration.”

128 See e.g. Advocate General Poiares Maduro in Case C-446/03 Marks & Spencer v. Halsey [2005] E.C.R. I-10837, para. [37] where he said national policies “must not result in less favourable treatment being accorded to transnational situations than to purely national situations”.

129 Case C-518/06 Commission v. Italy (Motor Insurance) [2009] E.C.R. I-000.

130 Cf. Case C-518/06 Commission v. Italy (Motor Insurance) [2009] E.C.R. I-000 with Joined Cases C-544/03 and C-545/03 Mobistar SA v. Commune de Fleron [2005] E.C.R. I-7723.

131 Snell, above n.127.

132 Case C-341/05 Laval un Partneri Ltd [2007] E.C.R I-11767.

133 Para. [99], emphasis added.

134 “Regulatory competition after Laval” (2007–8) 10 C.Y.E.L.S. 581, 585–7.

135 Case C-177/94 Criminal Proceedings against Gianfranco Perfili, civil party: Lloyd's of London [1996] E.C.R. I-161, para. [17]; Case C-384/93 Alpine Investments BV v. Minister van Financiën [1995] E.C.R. I-1141, para. [27].

136 Case C-285/01 Burbaud v. Ministère de l”Emploi et de la Solidarité [2003] E.C.R I-8219.

137 Para. [96]. To emphasize the point, the Court said that inasmuch as all new jobs are subject to a recruitment procedure, the requirement of passing a recruitment competition could not “in itself be liable to dissuade candidates who have already sat a similar competition in another Member State from exercising their right to freedom of movement as workers” (para. [97]).

138 Joined Cases C-51/96 & C-191/97 Deliège v. Ligue Francophone de Judo et Disciplines Associés [2000] E.C.R I-2549, para. [64].

139 Para. [64]. It was also unsuccessfully argued in Deliège that judo was not an economic activity and so Community law did not apply. This argument has successfully been used in the past to exclude the application of Community law: Case 344/87 Bettray v. Staatssecretaris van Justitie [1989] E.C.R 1621, para. [17].

140 Case C-190/98 Graf v. Filzmozer Maschinenbau GmbH [2000] E.C.R I-493. See C. Costello, “Market Access All Areas – the Treatment of Non-discriminatory Barriers to the Free Movement of Workers” (2000) 29 L.I.E.I. 267.

141 Para. [25]. The Court applied the same test in Joined Cases C-418/93 to C-421/93 and C-460/93-C-464/93, C-9/94 to C-15/94, Semeraro Casa Uno Srl and others [1996] E.C.R I-1683, para. [32] concerning Art. 43. In Case C-212/06 Government of the French Community and Walloon Government v. Flemish Government [2008] E.C.R I-1683 AG Sharpston supported this approach (paras. [55–6]): “A national measure can potentially constitute a prohibited obstacle even if it is non-discriminatory. However, in order actually to constitute an obstacle, such provision must affect access of workers to the labour market and their effect on freedom of movement must not be too indirect and uncertain.” On the facts, the Court found that the restrictive effects of the Flemish legislation – which confined affiliation to a care insurance scheme to those residing in the Dutch speaking region of Belgium and the bilingual speaking region of Brussels – were not “too indirect and uncertain for it to be impossible to regard that legislation as constituting an obstacle contrary to Articles 43 and 49” (para. [51]).

142 The Court particularly uses the term “restrictions” in the establishment cases (e.g. Case C-250/95 Futura Participations SA [1997] E.C.R I-2471; Case C-446/03 Marks & Spencer's v. Halsey [2005] E.C.R I-10837, para. [34]) and the services cases (e.g. Case C-255/04 Commission v. France (performing artists) [2006] E.C.R I-5251, para. [38]). This reflects the language of the relevant Treaty provisions.

143 The term “restrictions” or “obstacles” are synonymous: see e.g. Joined Cases C-388/04, C-359/04 and C-360/04 Placanica [2007] E.C.R. I-1891, para. [43]: “the restrictions imposed on intermediaries … constitute obstacles to the freedom of establishment”. See also E. Johnson and O‘Keeffe, D., “From Discrimination to Obstacles to Free Movement: Recent Developments Concerning the Free Movement of Workers 1989–1994” (1994) 31 C.M.L.Rev. 1313Google Scholar.

144 A further disadvantage with the language of market access is that it risks downplaying the fact that rules which interfere with the exercise of a free movement right can have just as serious a consequence on free movement as the initial refusal of access, a fact the Court itself has recognized Case 197/84 Steinhauser v. City of Biarritz [1985] E.C.R. 1819. The Services Directive 2006/123 (OJ [2006] L376/26) addresses this problem by explicitly stating that the Directive applies to “requirements which affect access to or the exercise of a service activity” (9th Recital)).

145 See e.g. Case C-60/00 Carpenter [2002] E.C.R. I-6279.

146 Case C-518/06 Commission v. Italy (motor insurance) [2009] E.C.R I-000, para. [64].

147 Case C-384/93 Alpine Investments BV v. Minister van Financiën [1995] E.C.R. I-1141.

148 Case C-442/02 Caixa-Bank v. Ministère de l’Économie, des Finances et de l'Industrie [2004] E.C.R. I-8961.

149 Para. [39] (emphasis in the original) criticising, in particular, Case C-255/97 Pfeiffer Grosshandel [1999] E.C.R. I-2835.

150 Para. [62]. The Court itself acknowledged this in Case C-290/04 FKP Scorpio [2006] E.C.R. I-9461, [46] “the application of the host Member State's national rules to providers of services is liable to prohibit, impede or render less attractive the provision of services to the extent that it involves expense and additional administrative and economic burdens”.

151 For criticism of the paucity of the Court's market access analysis, see Spaventa, E., Case note on Case C-442/02 Caixa-Bank (2005) 42 C.M.L.R. 1151Google Scholar. Cf. G. Davies, Nationality Discrimination in the European Internal Market (The Hague 2003), 96–98 on the differences between the types of litigants in free movement and competition cases which necessitates a different approach to proof.

152 Case C-415/93 Bosman [1995] E.C.R I-4921, para. [103].

153 See e.g. Case C-49/89 Corsica Ferries [1989] E.C.R. I-4441, para. [8]: “the articles of the EEC Treaty concerning the free movement of goods, persons, services and capital are fundamental Community provisions and any restriction, even minor, of that freedom is prohibited”.

154 Eg, Advocate General Cosmas said in Case C-134/94 Esso Española SA v. Comunidad Autónoma de Canarias [1995] E.C.R I-4223, para. [24] that there needs to be a “foreseeable restrictive effect on intra-Community trade” to breach Article 28. In the British courts, Walker LJ, as he then was, talked in R. (on the application of Professional Contractors Group Ltd) v. Inland Revenue Commissioners [2002] 1 C.M.L.R. 46 of a “direct and demonstrable inhibiting effect on the particular right which is asserted”. He recognised that there was a need for some minimum standard otherwise “the UK Government would be in breach because of the poor state of this country's public transport infrastructure”.

155 There might be hints in the Court's case law that there is a sea-change in its approach. In Case C-353/06 Grunkin-Paul [2008] E.C.R I-000, paras. [23], [24] and [29] the Court talked of the “serious inconvenience” caused by a discrepancy in surnames which created an obstacle to free movement of citizens under Article 18(1). In Case C-110/05 Commission v. Italy (Trailers) [2009] E.C.R I-000, para. [56] the Court referred to the “considerable influence” that a prohibition on the use of a product has on the behaviour of consumers and in Case C-518/06 Commission v. Italy (motor insurance) [2009] E.C.R I-000, para. [66] the Court said that an obligation to contract constitutes a “substantial interference in the freedom of contract”. In the context of positive integration, the Court has explicitly referred to a threshold criteria: Case C-376/98 Germany v. Parliament and Council [2000] E.C.R. I-8419, para. [107] “to interpret Articles 100a, 57(2) and 66 of the treaty as meaning that the Community legislature may rely on those articles with a view to eliminating the smallest distortions of competition would be incompatible with the principle … that the powers of the Community are those specifically conferred on it”. See also H. Toner, “Non-discriminatory Obstacles to the Exercise of Treaty Rights – Articles 39, 43, 49, and 18 EC” (2004) 23 Y.E.L. 275, 285–6 who argues that there are two possible thresholds: direct or significant. If the obstacle is direct then its effect needs only be perceptible; if the measure is significant or substantial then the obstacle does not need to be direct.

156 According to the orthodoxy, distinctly applicable rules breach the Treaty and can be saved only by the express derogations in the Treaty, and not the judicially developed mandatory (or public interest) requirements (Case 113/80 Commission v. Ireland (Irish souvenirs) [1981] E.C.R. 1625, para. [11]; Case 177/83 Ringelhan [1984] E.C.R. 3651, para. [19]) although this position is now changing (see e.g. Case C-54/05 Commission v. Finland [2007] E.C.R. I-2473 the Court permitted a Finnish requirement of import licences for vehicles, traditionally a distinctly applicable measure, to be justified by a road safety mandatory requirement).

157 Above n. 21, 68, 72ff, citing cases such as Case 178/84 Commission v. Germany (Beer Purity) [1987] E.C.R 1227; Case 407/85 3 Glocken [1988] E.C.R 4233.

158 Viking, para. [77].

159 Ibid, para. [81]. This is a reference to the fact that Viking, presumably on good advice, had given an undertaking that neither it nor companies in the same group would “by reason of the reflagging terminate the employment of any person employed by them.”

160 A. Davies, “One Step Forward, Two Steps Back? The Viking and Laval cases in the ECJ” (2008) 37 I.L.J. 126, 143. See also R. O'Donoghue and and B. Carr “Dealing with Viking and Laval: From Theory into Practice” (2008–9) 10 C.Y.E.L.S. forthcoming.

161 Joined Cases C-267 & 268/91 Keck and Mithouard [1993] E.C.R I-6097.

162 In Case C-168/01 Bosal Holding BV v. Staatssecretaris van Financiën [2003] E.C.R. I-9409, the Court found a breach of Article 43 due to its assessment that the Dutch tax rule merely “might dissuade” a parent company from carrying on its activities through the intermediary of a subsidiary established in another Member State”. This decision cost the Dutch treasury millions.

163 Case C-387/01 Weigel v. Finanzlandes direction für Vorarlberg [2004] E.C.R. I-4981.

164 Para. [52]. For a US equivalent, decided under the Dormant Commerce Clause, American Trucking Associations, Inc v. Michigan Public Service Commission 545 US 429, 434 (2005): “The statute applies even-handedly to all carriers that make domestic journeys … Nothing in our case law suggests that such a neutral, locally focussed fee or tax is inconsistent with the dormant Commerce Clause.”

165 Para. [54].

166 See, by analogy the Art. 49 case, Joined Cases C-430 and 431/99 Sea-Land Service [2002] E.C.R. I-5235.

167 See also Case C-392/05 Alevizos v. Ipourgos Ikonomikon [2007] E.C.R. I-3505, para. [76].

168 Joined Cases C-544/03 and C-545/03 Mobistar SA v. Commune de Fleron [2005] E.C.R. I-7723. See V. Hatzopoulos and T. Do, “The Case law of the ECJ concerning the Free Provision of Services: 2000–2005” (2006) 43 C.M.L.Rev. 923, 958–960.

169 K. Banks, “The application of the fundamental freedoms to Member State tax measures: guarding against protectionism or second-guessing national policy choices” (2008) E. L. Rev. 482, 504. See also Snell, J., “Non-discriminatory Tax Obstacles in Community Law” (2007) 56 I.C.L.Q. 339CrossRefGoogle Scholar.

170 Case C-433/04 Commission v. Belgium (tax fraud) [2006] E.C.R. I-10653.

171 Case C-232/03 Commission v. Finland [2006] E.C.R. I-27.

172 Case C-374/04 Test Claimants in Class IV of the ACT Group Litigation [2006] E.C.R. I-11673.

173 Case C-446/04 Test Claimants in the FII Group Litigation [2006] E.C.R. I-11753.

174 Dir. 98/34/EC of the European Parliament and of the Council laying down a procedure for the provision of information in the field of technical standards and regulations ([1998] OJ L204/37).

175 Case C-194/94 CIA Security International SA v. Signalson SA and Securitel SPRL [1996] E.C.R. I-2201.

176 Case C-443/98 Unilever Italia SpA v. Central Food SpA [2000] E.C.R. I-7535.

177 Case C-159/00 [2002] E.C.R. I-5031.

178 See also Council Reg. 764/2008 laying down procedures relating to the application of certain national technical rules to products lawfully marketed in another Member State and repealing Decision No 3052/95 (OJ [2008] L218/21) as discussed in Editorial, “Institutionalization of Market Access” (2008) 35 L.I.E.I. 1.

179 The number of notifications increased generally from twenty-nine in 1984 to 439 in 1995 and 710 in 2007 (albeit with an enlarged EU): http://ec.europa.eu/enterprise/tris/statistics07/en.pdf.

180 OJ [2006] L376/26.

181 Art. 15(7).

182 Art. 39(5), second and third paras.

183 The Directive contains a number of specific screening duties for the Member States, as well as professional bodies, organisations and associations: (1) to review their authorisation schemes under Article 9(1); (2) to identify and remove the prohibited requirements under Article 14; (3) to evaluate the requirements under Articles 15 and 16; (4) to screen national requirements restricting service recipients under Article 19; (5) to screen national legislation under Article 24 to remove any bans on commercial communications by regulated professions and justify any restriction as to content and conditions of advertising or adapt them where necessary; (6) to remove restrictions on multidisciplinary activities except in certain circumstances, justify those that remain and assess whether those that remain could be replaced by less restrictive means (Article 25).

184 Other areas of law, particularly in the field of free movement of goods would also benefit from such an approach, as the Commission has now recognised in its documentation on a Single Market for the 21st century: Commission Staff Working document, “Instruments for a modernised single market policy” SEC (2007) 1518, 25.

185 Adding “significant additional costs” may, however, be enough: Case C-518/06 Commission v. Italy [2009] E.C.R. I-000, para. [68].

186 Case C-531/06, [2009] ECRI-000.

187 For the test of “substantial” see n.155 above. See also Walker L.J. in Professional Contractors Group Ltd and others v. Inland Revenue Commissioners, [2001] EWCA Civ. 1945, Court of Appeal, [2001] S.T.C. 631 “What I derive from these authorities (and especially from Graf, which is particularly instructive) is that a neutral, non-discriminatory national measure will not contravene the articles relating to freedom of movement unless it has a direct and demonstrable inhibiting effect on the particular right which is asserted.”

188 Case C-145/88 Torfaen Borough Council v. B & Q plc [1989] E.C.R. 3851, as argued in C. Barnard, “Sunday Trading: A Drama in Five Acts” (1994) 57 MLR 449.

189 Para. [17]. Some commentators suggest that the Court engaged in a similar kind of balancing in Case C-379/98 PreussenElektra v. Schleswag [2001] E.C.R. I-2099, this time in the context of a discriminatory rule: Johnston, A., Neuhoff, K., Fouquet, D., Ragwitz, M. and Resch, G., “The Proposed New EU Renewables Directive: Interpretation, Problems and Perspectives” (2008) 1 European Energy and Environmental Law Review 126, 134Google Scholar.

190 See e.g. Joined Case C-69 & 258/93 Punto Casa SpA v. Sindaco del Commune di Capena and others [1994] E.C.R. I-2355. Arguably, the US Supreme Court also does not engage in balancing in Keck style situations: Exxon Corporation v. Governor of Maryland 437 US 117, 127–8: ban on petrol producers from operating petrol stations in Maryland was found to be non-discriminatory and not to burden commerce.

191 See the observation by Chief Justice Roberts in United Haulers Association v. Oneida-Herkimer Solid Waste Management Authority 127 S.Ct 1786 (2007) who noted that “The Commerce Clause does not elevate free trade above all other values” (at 1795–6).

192 For a discussion of this term, see C. Joerges and F. Rödl, “‘Social Market Economy’ as Europe's Social Model?”, EUI Working Paper LAW No 2004/8, 19, who argue that “this concept contained an ordoliberal basis which was complemented by social and societal policies, whose aims and instruments were supposed to rely on market mechanisms”. See also C. Joerges “Democracy and European Integration: A Legacy of Tensions, a Reconceptualisation and Recent True Conflicts”, EUI Working Paper LAW No 2007/25.

193 In the first Irish referendum on the Lisbon Treaty the Technical Engineering and Electrical Union (TEEU) urged its 45,000 members to vote against the Treaty following the judgments in Viking and Laval: H. Mahoney, “EU Court judgments affecting the Irish treaty campaign”, eu.observer.com, 6 May 2008.

194 See F. Scharpf, “Democratic Legitimacy under Conditions of Regulatory Competition: Why Europe differs from the US” in R. Howse and K. Nicolaides, The Federal Vision, (Oxford 2001), 356–7, noting that in the EU, the creation of the internal market succeeded, rather than preceded, the creation of welfare states. By contrast, in the US, the situation was reversed: the creation of the internal market preceded and thus largely precluded the development of a welfare state since regulatory competition among state governments practically prevented all of them from adopting regulations, such as those prohibiting the employment of child labour, that would have reduced the competitiveness of the local product. In the US, competence in welfare matters was subsequently transferred to the federal level following the New Deal.