the “market access” Test

Introduction

‘The ambiguity surrounding the market access test does little to help the quest for clarity which characterizes the debate over the free movement provisions: the problem is that either a discriminatory approach is accepted, similar to the Court’s approach in Keck; or potentially almost any regulation might be seen as a restriction to market access.’ (E Spaventa, 'From Gebhard to Carpenter: Towards a (non-)economic European constitution' (2004) 41 Common Market Law Review 743-773, 764). This article will critically assess the suitability of the concept of market access to define the scope of rules on free movement in the internal market. This paper will discuss the ambiguity surrounding the market access test, by looking at four distinct phases in the development of the law in this area. It will discuss the Dassonville[1] case as representative of a move away from a simple discrimination model. Then the Cassis de Dijon case which heralds a ‘home country control’ approach to the scope of Article 34. The Keck case[2] will be discussed which signals a retreat to a more measured understanding of the scope of free movement rules and finally the Commission v Italy (‘motorcycle trailers’)[3] case as indicative as a recentering of the law around the notion of market access. All of these will be examined along with the issues around them with academic commentary and this article will conclude its findings.

Can we define the market access test?

The European Union's case law establishes three main tests—or combinations thereof—by which a national action may be recognised as having the measure having equivalent effect of a quantitative restriction (MEQR) on imports within the meaning of Article 34 of the Treaty on the Functioning of the European Union (TFEU). To begin, a national measure may constitute a MEQR if its objective is to favour home production or trade at the cost of production in other Member States or cross-border commerce.[4] Second, a measure may be a MEQR if, regardless of its intended objective, it favours domestic goods or trade more favourably than production in other Member States or cross-border commerce.[5] Third, if a measure prevents goods from other Member States from accessing the domestic market, regardless of its discriminatory aim or impact, it may constitute a MEQR.[6]

Consider a rule that restricts the size of retail establishments. Assume that you are not permitted to have a shop larger than 100 square metres. Would you argue that such a restriction stops you from accessing markets for products, or is it a law that restricts the total number of items you may sell, hence limiting your profit, but does not prevent you from entering the market per se? If a Swedish furniture manufacturer's business strategy is based on having a large warehouse adjacent to a large showroom with a large parking park where customers may arrive in their cars or Lorries and self-transport the furniture from the premises.

As a result, they are able to sell their furniture at relatively inexpensive pricing. They must determine whether to operate a shop in a nation with strict restrictions on the size of retail premises, if they cannot have retail premises larger than 100 square metres. Here, selling implies that it would be pointless for them to start a business in a nation with extremely tight regulations. This restriction to the market and if it is in the true sense then it can amount to a trade restriction. After all the Luxembourg Court’s (ECJ or CJEU) decisions, the question for us is can we define the idea of market access and its scope without concluding whether the numerous standards that the Court has used on occasion to one freedom are equally relevant to the others?

The Pre-Keck Position in Cases on MEQRs

The formation and growth of the European Union's (EU) Internal Market have been significantly aided and facilitated by negative integration dynamics. It was the ECJ that intervened and took the initiative in resolving the 1960s/1970s political standstill and enabling the progress of economic unification. With its two seminal judgements in Dassonville[7] and Cassis de Dijon,[8] the Court established the force of negative integration and ushered in a new age in which any national regulation capable of impeding intra-Community commerce, directly or indirectly, already or theoretically, might be considered a MEQR.[9] The idea of mutual recognition was established as the primary criterion for establishing whether or not there was a trade restriction.[10] This meant that non-discrimination and anti-protectionism principles were quickly supplanted by the startlingly wide and ‘inherently nebulous’[11] idea of market access. The far-reaching ramifications did not take long to manifest: in the aftermath of the two verdicts, a tsunami of speculative national cases erupted, seeking to invalidate all manner of national legislation on the grounds that they conflicted with the free movement regulation.[12]

The majority of the disputed measures were broadly applicable regulatory requirements that applied uniformly to domestic and international goods or merchants and had no effect on or restriction of interstate commerce. This onslaught of legal challenges to national regulations controlling marketing and selling conditions was interpreted as an infringement on national regulatory autonomy, and it was increasingly argued that the Court should define and specify the scope of Article 34 TFEU.[13] In a similar vein, Advocate General (AG) Tesauro courageously admitted in Hünermund[14] that he had changed his mind about his previous case law views,[15] and he concluded the Dassonville formula could not be understood to suggest that a possible reduction in imports induced wholly and only by a broader general contraction in sales could be read as a MEQR.[16] As a result, he asserted that rules governing Article 34 would not be triggered by trading activity, in principle, provided they did not intend to regulate trade and were not likely to make ‘market access’ less profitable for an importer. He considered that this method adhered to the idea laid down in Cassis de Dijon of ‘mutual recognition’ and did not diminish its really integrationist inspiration in any way. A different of Article 34 TFEU “would eventually nullify or devalue the Treaty provisions”.[17]

The Keck and Mithouard case

The Court eventually recognised that its expansive concept of MEQR and its ill-defined approach to market access had unintentionally unlocked a Pandora’s Box. Thus, in 1993 in the case of Keck, the ECJ had to examine French law on loss-making re-sale, it chose to put a stop to the opportunistic and unfounded action. It stated expressly its desire to “necessary to re-examine and clarify its case law on this matter”[18] (like Blesgen,[19] Quietlynn,[20] Cinéthèque[21] and Torfaen[22]) in light of traders’ increased use of Article 34 TFEU to challenge any laws limiting their economic freedom, even where such rules were not directed at products from other Member States.[23] Therefore, created the concept of selling arrangements: that trading restrictions which were selling arrangements and limited the sale of goods directly or indirectly, actual or potential, would not fall within Article 34 if they: i) applied to all relevant traders within the national territory; and (ii) they affected domestic products in the same manner, in law and in fact.[24] In general, principles governing the location and timing of sales, as well as the marketing of individual items, were seen to be captured by the Keck-formula.[25] In Semeraro Caso[26] without even examining the importer's contention that the measure resulted in inequity, the Court of Justice determined that the measure was a selling agreement exempt from Article 34 applicability.

The Objection to the test

The rather artificial distinction between product regulations and selling arrangements, on the other hand, proved insufficient and provoked an academic controversy.[27] According to Gromley, excluding selling agreements from the ambit of Article 34 TFEU would result in a dearth of judicial assessment of allegedly harmless acts that might yet represent disguised limitations on inter-State commerce.[28] Weatherill acknowledged that the ruling excluded certain regulatory choices that do not impair the realisation of economies of scale from the Treaty's scope. He believed it lacked a ‘disturbingly formalistic tone’ and was “flawed by the absence of an adequate articulation of just why it was possible to conclude that no sufficient impact on trade between States was shown”.[29] Thus, he suggested a revised Keck-test (discussed below) that would let Member States to use national regulatory measures to imported products as long as they applied equally in law and fact to local and imported goods and did not create a direct or significant impediment to market access.[30]

This can be traced back to Advocate General Jacobs' opinion in Leclerc-Siplec,[31] where he objected to the Keck-inspired presumption of legality of selling arrangements and recommended the implementation of a test based on ‘substantial impediment to market access’ to determine whether non-discriminatory rules violated Article 34 TFEU.[32] Other Advocates General[33] and legal experts have emphasised the importance of the effect on market access as a requirement for demonstrating the existence of a MEQR.[34]

It was contended that case law permitted de minimis factors in free movement legislation, in the sense that 'minimal restrictive effects' had no impact on market access, but numerous trade restrictions harmed market access severely and so violated Article 34 TFEU.[35] However, the Court's stance was less certain. While it apparently opposed the use of a “de-minimis test in the free movement”,[36] it essentially accepted that if the impact on market access was ‘too ambiguous or indirect’[37] or ‘purely hypothetical’,[38] the disputed measure did not violate free movement principles.

A Post-Keck Market Access Test

The Court began by limiting the scope of selling agreements and subsequently adopted an overly expansive 'market access' standard.[39] In particular, subsequent case law has interpreted the two conditions set forth in of Keck[40] to mean a selling arrangement cannot escape scrutiny under the free movement provisions if they are discriminatory or are imposing for burdens additionally on imported goods (such a ‘dual burden’ that the Cassis de Dijon decision sought to alleviate with the principle of mutual recognition). Cases such as Gourmet,[41] De Agostini,[42] Familiarpress,[43] and Alfa Vita[44] signalled a shift away from a doctrinal distinction between ‘product rule’ and ‘selling arrangement’ toward a more straightforward ‘market access hindrance’ test.[45] The ECJ have gradually strayed from the Keck formula, without officially overruling it. In such as in Mickelsson and Roos[46] or Commission v Italy (motorcycle trailers)[47] the ECJ reintroduced a revised market access test under which laws regulating the use of goods obstruct foreign products’ market access and thereby constitute MEQR forbidden by Article 34 TFEU.[48]

In a similar fashion the ECJ determined in LIBRO[49] that book price fixing of German language books in Austria violated Article 34 TFEU, since it may possibly impede market access for importers of German books.[50] Likewise, the importance of the ‘market access’ test was recently reaffirmed in the Scotch Whisky case,[51] where the Court determined that Scotland had imposed a minimum price on each unit of alcohol which prevented importer from offering goods at a lower price that, thereby impeding the entry of alcoholic beverages into the UK market.[52]

This ‘market access’ criteria, however, is sometimes limited by an extra step requiring that the contested legislation have a direct, substantial and significant influence on inter-State commerce. Thus, in Ker-Optika, the Hungarian case concerning a prohibition on the sale of contact lenses via the Internet was found to be a MEQR within the meaning of Article 34 TFEU, thereby impeding market access significantly.[53] Although the Court’s vocabulary and specific standards are inconsistent, the reality remains that its approach implicitly contains a quantitative component: the MEQR definition include only indicators that directly, substantially, significantly impact inter-State commerce. By contrast, policies affecting market access that are speculative, distant, unclear, or indirect avoid internal market examination. One may argue that the ‘substantial impact’ test refers to a threshold that must be fulfilled for a measure to qualify as a MEQR, while the ‘remote effect’ test aims to show a causal relationship between the disputed measure and inter-State trade restrictions. Regardless, this difference is not without controversy, which is why some writers observe a convergence of the two tests.[54]

Oliver and Enchelmaier

As Oliver and Enchelmaier[55] observe, the most authoritative attack on Keck's argument has been made by AG Jacobs in Leclerc-Siplec. AG Jacobs believed that such a tight separation between “laws establishing standards for commodities” and “selling arrangements” was untenable, and that the test of equality was inconsistent with the Treaty's objectives, namely the development of a single market. Simultaneously, AG Jacobs proposed criteria for determining whether a policy imposes a significant limitation on market access. Given that Leclerc-Siplec was referring to a partial prohibition on advertising (television advertising), he concluded that this did not amount to a significant limitation of market access. He did, however, provide an example of direct television marketing: in this case, prohibiting television advertising would imply significant limitation.

Schütze

The analysis of the relationship between Keck and the market access test for Schütze, is that there is no singular solution to this question after Keck. After explicitly acknowledging the existence of distinct tests for distinct sorts of measurements, the post-Keck EJEU develops three distinct lines of jurisprudence that correspond to three distinct market models. While the court limits measures regulating selling arrangements to an international model, it also confirms the Cassis model's parameters for product requirements; and, in Italian Trailers, the Court establishes a third line of jurisprudence on consumer-use restriction that approaches a national market model. The Court lifts the market access concept to the front in this third line, and it is this development that has sparked the issue of how the three jurisprudential lines connect to one another. Have they maintained distinct—parallel—lines, or have they converged into a unified doctrinal framework that applies universally to all measures falling within Article 34? For Schütze the court seems to unite all three lines rhetorically in Ker-Optika and its offspring. He argues that many ambiguities within this doctrinal solution have persisted.[56]

Weatherill

Professor Weatherill took a different tack, stating that the prohibition on reselling at a loss (Keck) escaped Article 34 TFEU because these were selling arrangements that applied equally in law and fact and posed no direct impediment to a Member State's market access.[57] No impediment existed to achieving economies of scale and expanding customer choice. Professor Weatherill also suggests revising the Keck test as follows: measures introduced by a Member State that apply equally in law and fact to all goods or services regardless of origin and impose no direct or significant impediment to imported goods or services access to that Member State's market escape the scope of Articles 34. Following this line of thought, comprehensive prohibitions on the sale of products or services, even if enforced equitably, would still need to be justified on the basis of having direct and significant hindrance to market access.

Snell

For Snell, the CJEU seems to place a premium on the measure’s importance, with all the uncertainty that involves, while unwilling to assert unequivocally that laws having small effect violate the Treaty. Snell makes the distinction between the two set of rules, and says they are a matter of degree. It is what is difficult because the two merge into each other at the margins. When you think about it from the perspective of a trader, you are going to access turnover markets if there is sufficient profit to be made on it. Otherwise you would not access it. So to that extent, anything, which has an impact on the profit that you make on a market, ultimately has the potential of affecting access to, the market and the margin for traders. So if the degree of profit you expect to make from the market is marginal, they may be persuaded not to open in that particular market. So that was one of the criticism Snell makes. It is one, which is difficult to sustain. Then he goes into, the refinements that are made about it by having that notion of market access, hindrance to market access being qualified by a substantial hindrance to market access. He argues that there are problems with the notion of substantial hindrance to market access. He argues that it's not clear that it is a notion with common sense in its case. Snell also argues that this is tantamount to introducing a de-minimis rule in Article 34, making it more like what we have in competition law.[58]

But if you start to do that, there are a whole host of complications that come into the process, because: i) what do you mean by this substantial hindrance? ii) That means you have to define a market, iii) You have to carry out the kind of complex market analysis, that we tend to have in competition law that makes, free movement law much more difficult to administer, especially as, whereas in competition law that do that kind of work of market analysis.  Here, in the context of free movement, it will be the courts doing essentially this type of economic analysis, it can be potentially problematic. Snell also argues, when you should look at the way that the thing is being applied by the court, very often it collapses either into a notion of, discrimination, on the one hand, or complete closure of a market on the other. If this is the case, hindrance to market access is either: we cannot access the market, it is virtually foreclosed, or: access to the market is being made more difficult for imported goods, then the notion does not add anything to what we already have.

Davies

Davis argues that the market and Article 34 uses the kind of analysis that we do in the context of competition. Davis is much more open in accepting that in effect, Article 34 takes it cues from the competition law. Davis argues, it is not so much discrimination between domestic and imported goods, rather it is discrimination between new actions onto the market and, existing actions i.e. existing market participants. If a rule makes it more difficult for a trader to enter the market, then that will be something which is caught by Article 34. But in doing that he is essentially almost turning Article 34 into a competition measure, into something, which is quite similar to what we have in competition law. One can argue whether it's a good thing or a bad thing, but it does make the task, of course, much more difficult for the reasons stated above.

There is an issue here as to whether this is justifiable, given the objective of Article 34. If Article 34 is about removing barriers between the member states, then Davis takes us away from that, because it is not only an issue of what is between the member states in the approach that he takes. It does not matter, in his approach, whether the trader imports goods from another member state, the discrimination would apply that in the same way between two traders within a single state, and that is arguably constitutionally problematic, because you could argue that it, it goes beyond the mandate, which is given to the EU, under Article 34, or with moving barriers between the member states.[59]

Conclusion

From the other side, addressing Keck and the market access test, it is possible that we are seeking for resistance where none exists. Keck is concerned about market access. Wenneras & Boe, argue the CJEU in Moped trailers and Mickelsson and Roos have recently explained in Keck, Article 34 TFEU prohibits a measure that is discriminatory and restrict market access for imported products, either in law or in practice, or that it prevents/hinders market access.[60]

Nonetheless, it is sometimes difficult to determine which of the three factors – market access, discrimination and protectionism, and economic freedom – is crucial in CJEU judgments. One might get the impression that those tests remain elusive and are frequently used intuitively, after determining whether discrimination could be established, considering possible justifications in particular cases, and combining this intuition with a general sense of what is reasonable and logical.

This essay makes no claim to have the solution to this very complicated and multifaceted problem. However, this paper has attempted to reflect on the crucial concept of ‘restriction’ as developed in the ECJ's case law in the sphere of trade and to draw some similarities with the court's case law in the in relation to the ‘access to the market test’ and concludes that a unified doctrinal framework seems in reach.

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Footnotes

[1] C- 8-74, Dassonville, [1974] ECR 00837

[2] Joined Cases C-267/91 and C-268/91, Keck and Mithouard

[3] C-110/05 Commission v Italy (motorcycle trailers) 2009 EU:C:2009:66

[4] C-110/05 Commission v. Italy (motorcycle trailers), 2009 EU:C:2009: 37

[5] G. Davies, Nationality Discrimination in the European Internal Market 10 (Kluwer Law International, 2003)

[6] C -456/10, Asociatión Nacional de Expendedores de Tabaco y Timbre

(ANETT) v. Administración del Estado, paras. 43–44 (European Court of Justice 2012)

[7] C- 8-74, Dassonville, [1974] ECR 00837

[8] C- 120/78 Cassis de Dijon, [1979] ECR 00649

[9] C-8-74, Dassonville, at 5

[10] C. Barnard, The Substantive Law of the EU (2014), at 656

[11] P. Oliver and S. Enchelmaier, ‘Free Movement of Goods: Recent Developments in the Case Law’, (2007) 44 Common Market Law Review 649, at 674

[12] J. Snell, ‘The Notion of Market Access: A Concept or a Slogan?’, (2010) 47 Common Market Law Review 437, at 447

[13] J. Steiner, ‘Drawing the Line: Uses and Abuses of Article 30 EEC’, (1992) 29 Common Market Law Review 749

[14] C-292/92 Hünermund EU:C:1993:932

[15] Opinion of Advocate General Tesauro in Case C-292/92, Ruth Hünermund, [1993] ECR I-06787, para. 26

[16] Ibid., para. 25

[17] Ibid., para. 27

[18] C-267 & 268/91 Keck and Mithouard [1993] ECR I-6097 at 14

[19] Case C-75/81 Joseph Blesgen v Belgium (1982) ECR 1211

[20] C-23/89 Quietlynn EU:C:1990:300

[21] 60&61/84 Cinéthèque EU:C:1985:329

[22] C-145/88 Torfaen Borough Council v B&Q plc EU:C:1989:593

[23] Joined Cases C-267/91 and C-268/91, Keck and Mithouard, at 14

[24] Ibid., at 16

[25] Case C-71/02, Herbert Karner, [2004] ECR I-03025, at 38

[26] Case C-418/93 [1996] ECR I-2975, Semeraro Caso Uno Srl v Sindaco del Commune di Erbusco

[27] S. Weatherill, ‘The Road to Ruin: “Restrictions on Use” and the Circular Lifecycle of Article 34 TFEU’, (2012) 2 European Journal of Consumer Law 359

[28] L.W. Gormley, ‘Two Years After Keck’, 19 (1996) Fordhman International Law Journal 866, at 885-886

[29] S. Weatherill, ‘After Keck: Some Thoughts on How to Clarify the Clarification’, (1996) 33 Common Market Law Review 885, at 887

[30] Ibid., at 903

[31] Opinion of Mr. Advocate General Jacobs in Case C-412/93 Leclerc-Siplec, [1995] ECR I-00179

[32] Ibid., para. 39.

[33] Opinion of Advocate General Stix-Hackl in Case C-322/01, DocMorris NV, [2003] ECR I-14887, para. 78

[34] M.S. Jansson and H. Kalimo, ‘De Minimis Meets “Market Access”: Transformations in the Substance – and the Syntax – of EU Free Movement Law?’, (2014) 51 Common Market Law Review 523

[35] Ibid at 526

[36] Joined Cases 177 and 178/82, Jan van de Haar, [1984] ECR-01797

[37] C-69/88, H. Krantz GmbH, [1990] ECR I-00583, at 11

[38] C-299/95, Friedrich Kremzow v. Republik Österreich, [1997] ECR I-02629, at 16

[39] C. Barnard, The Substantive Law of the EU (2014), at 20

[40] C-267 & 268/91 Keck and Mithouard [1993] ECR I-6097 at 16

[41] C-405/98, Gourmet

[42] Joined Cases C-34/95, C-35/95 and C-36/95, De Agostini

[43] C-368/95, Familiapress, [1997] ECR I-03689

[44] Joined Cases C-158/04 and C-159/04, Alfa Vita, [2006] ECR I-08135, at 19

[45] J. Snell, ‘The Notion of Market Access: A Concept or a Slogan?’, (2010) 47 Common Market Law Review 437, at 447

[46] C-142/05, Mickelsson and Roos, [2009] ECR I-04273

[47] C-110/05, Commission v. Italy (trailers), [2009] ECR I-00519

[48] L. Prete, ‘Of Motorcycle Trailers and Personal Watercrafts: The Battle over Keck’, (2008) 35 Legal Issues of Economic Integration 133

[49] C-531/07, Fachverband der Buch- und Medienwirtschaft v. LIBRO Handelsgesellschaft mbH, [2009] ECR I-03717

[50] C-531/07, Fachverband der Buch- und Medienwirtschaft, at 21-22

[51] C-333/14, The Scotch Whisky Association and Others, [2015] n.y.p

[52] Ibid., at 32

[53] C-108/09, Ker-Optika, [2010] ECR I-12213, at 54

[54] Barnard (2014), at 147 and Weatherill (1996), at 900

[55] Oliver & Enchelmaier, ‘Free Movement of Goods: Recent Developments in the Case Law’ (2007) 44 CMLRev., 649–704

[56] Schütze, Robert, ‘Of Types and Tests: Towards a Unitary Doctrinal Framework for Article 34 TFEU?’ (2016) 41(6) European Law Review, p.826-842

[57] Weatherill, ‘After Keck: Some thoughts on how to clarify the clarification’ (1996) 33 CMLRev, p. 885-906

[58] J. Snell (2010)

[59] G Davies, ‘Understanding Market Access: Exploring the Economic Rationality of Different Conceptions of Free Movement Law’ (2010) 11 German Law Journal 671 (DOI: https://doi.org/10.1017/S2071832200018800)

[60] Wenneras & Boe Moen, ‘Selling arrangements, Keeping Keck’, (2010) 35 ELRev.. 387 -400