Have the CJEU abandoned the Keck formula?
At a time when art. 34 TFEU was already well-settled law, the enormous amount of litigation created by the rules advanced by the ECJ itself to protect freedom of movement of, inter alia, goods and services, was clogging the Court. The Court turned the tide with the decision in Keck v Mithouard (1993), a terse ruling that would have halt the floodgate of litigation and save the Court from being involved in purely internal matters, as the Court perceived them. This essay will consider the decision in Keck and its implications. Second, it will explore the reactions to Keck that pushed for the development of the judicial approach to the area. Lastly, we will look at more recent decisions to comprehend how the trends have evolved.
Keck
With its decision in Keck, the ECJ made a step back from its generous approach very inclusive of any type of national measure that could have hindered one of the fundamental freedoms in the EU, particularly of goods and services. Not only were the Court and the national Courts clogged, but allegedly, over-ambitious attempts of traders to exploit the rules were now common practice.
Stephen Weatherill in ‘After Keck: some thoughts on how to clarify the clarification’ gives us a critical account, not so neutral, of Keck and the development of case law and principle stemming from the reactions to that decision. He states that the ECJ was unwilling to review what it perceived as ‘local regulatory choices’ that were furthermore characterized by ‘remoteness from the internal market’. The ‘Sunday Trading rules’ cases would have been easily decided under Keck, and considered involving merely purely internal situations with no involvement of the EU law. Keck held that these rules had no impact on cross-border trade, and did not trigger violations of art. 34 TFEU, coming as a decision that looked like a ‘cleansing operation of the minutiae of purely internal affairs’.
This marked a reduction in the scope of the EU trade law and internal market law, however a period of confusion on the application of art.34, which was already well-settled law, begun. Keck bred a sequence of many preliminary references under art. 267 TFEU, with the risk, as Weatherill describes it, of the ‘internal market baby might be thrown out with the bathwater of general regulation of commercial freedom’.
Problems with Keck
The decision in Keck is hard to criticize if we look at its facts. The events in Keck hardly could be said to factually involve cross-border issues, instead they refer to internal prohibition to resale at a loss. The main criticism of Keck is that the Court transformed what should have been a case limited to its own type of facts, into a general principle that dangerously in its ‘disturbingly’ formalistic tone would have been used to decide cases that, instead, involve cross- border issues and affect the development of the EU internal market. For this reason, Keck is seen as not being a reliable foundation for the development of the law. Moreover, the Court delivered a flawed ruling where it did not discuss why there was not sufficient impact on inter-state trade, and it failed to name what cases were overruled. Describing traders as over-ambitious exploiters is also incoherent, because they allegedly exploited a system of rules created by the ECJ itself.
The risk created by Keck is clear in Commission v Greece (1995) where Greek rules forbid the sale of baby milk not in pharmacists’ shops. A-G Lenz in his opinion describes art. 34 to go beyond a mere prohibition of discrimination, he states that it helps to establish and maintain the internal market. A hindrance of access test would be more determinative; however the Court uses the Keck formula and see the measure as mere limitation of commercial freedom, and not anything affecting cross-border trade.
Questions of market access are discussed in the following cases: in Leclerc-Siplec (1995) on French rules banning TV advertising, A-G Jacobs endeavored to smooth the edges of Keck: he stresses the key role of advertising in building an integrated market, particularly because markets are populated by existing, familiar brands. He favored freedom to advertise and criticized Keck saying that the category of ‘selling arrangements’ is too rigid and that traders should have unfettered access to the whole Community Market, unless serious interests of the MS need to be protected. Again, he also prefers a hindrance of access test. In this case, the partial ban on advertising was seen by him and the court as not substantially restricting access, however, and this is the key to many criticisms, it might prevent the construction of an integrated cross-border marketing strategy for instances that would be distinguished from these or Keck facts and would need unfettered access to markets.
We have to note the importance of the sophistication of this policy-based analysis that is so in contrast with the court’s words in Keck. It shows the tension between excessive formalism of the Keck formula, and the broader quest for the internal market.
Three months later, in Alpine Investments A-G Jacobs again sees Dutch rules restricting ‘cold calling’ to sell financiòla products and find customers over the phone as restricting access to market. These rules would have not applied to a purely internal situation, this was marketing of operators in other mS that effected marketing in the whole EU. This case is clearly distinguished from the facts in keck, it is capable of hindering intra-Community trade. Nonetheless the court found the rules justified, avoiding to treat them as extraterritorial in effect to protect the reputation of Dutch firms.
With Bosman, it becomes clear that rules of equality of application between domestic and imported goods or services are not determinative, instead the loss of direct market access is the trigger. Keck had to be refined: its facts did not show impediment to market access, but the decision had to provide a general principle that can be utilized in situations where the access must be preserved, liberating the decision from its narrow and formalistic approach. Keck is dangerous as a wider principle, as we can see in para. 16 and 17 where rules are described as ‘not by nature …prevent or impede access’. This assumption is not correct: such rule does not prevent access in cases seen above, but it might prevent market access for other cases.
The end of Keck?
Keck has not been overruled, simply the trend has been towards embracing an ‘access to market test’ that is not so formalistic and would encompass under art. 34 more situations that trigger cross-border trade and, ultimately, contribute to the reinforcement of the EU internal market.
In Commission v Italy (2009) the principle of mutual recognition supersedes possible use of Keck formula. Italy prohibited mopeds or any other types of bikes to tow a trailer, whilst these trailers were lawfully manufactured and marketed in other MS. Here there is a dismissal of Keck threshold, rejecting a possible extension of Keck to ‘use arrangements’ and embrace the ‘access to market test’. A strictly sanctioned use of jet skis on inland waters is seen as obstacle to free movement of goods in Mickelsson (2009). The aim is clearly not to treat jet skis from other MS less favorably, however the restriction has of course a strong influence on consumers behavior, hence it is found a breach of art. 34. Again ‘product uses’ are not saved under Keck.
Both of the above cases, however, have been found as justified on grounds of public aims such as road safety and protection of environment. This approach has been confirmed in Scottish Whisky Association v Lord Advocate (2015) where imposing a minimum price per unit of alcohol (MPU) has been found breach of art. 34.
Two important cases show that mail-order or online prescription pharmacies were restricted in their sale into another MS by national rules: in Deutscher Apothekerverband v 0800 DocMorris NV (2003) and Deutsche Parkinson Vereinigung (DPV) (2016) German rules imposed respectively limitations on the place of sale and a strict price system, were found breach of art. 34. These restrictions clearly have a harsher impact on imported products, and were found to be an impediment on market access. It is important to note that since the era of ‘Sunday Trading rules’ cases, we have seen a trend in growing complexities and broadening of possible situations where art. 34 could be involved. The internal market becomes more complex and interconnected, so the issues related to it develop and come in new forms as well.
These cases cannot be considered as overruling Keck, however they considerably diminished its application. Strictly speaking, the Keck exception is still applicable: recently in Visnapu (2015) the Court still attempts to apply Keck formula, however finds that the request to hold a license to import alcoholic is breach of art. 34. Instead in Colruyt (2016) the Court consider Belgian minimum pricing legislation for tobacco products and finds under Keck that there has been no violation of art. 34.
