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[1] Suggested by P. OLIVER, FREE MOVEMENT OF GOODS IN THE EEC 52 (2d ed. 1988). This example recalls a written question submitted to the Commission in 1982. See OJ 1982 C266/13 and OJ 1983 C93/1.
[2] OLIVER, supra note 1, mentions in particular a dockers' union which aims to prevent imports. VerLoren van Themaat and Gormley, Restrictions of Free Trade, (1981) 3 Northwestern Journal of International Law & Business 577, 608 mention collective action by employees when threatened with job losses due to imports, or acting in sympathy with colleagues in another State.
[3] KAPTEYN AND VERLOREN VAN THEMAAT, INTRODUCTION TO THE LAW OF THE EUROPEAN COMMUNITIES 380 (2d ed. 1989).
[4] Unless otherwise stated, the provisions discussed in this paper appear in the same form in both the TREATY ESTABLISHING THE EUROPEAN ECONOMIC COMMUNITY (as amended) [EEC] and the TREATY ON EUROPEAN UNION [TEU]. The expression 'Treaty' should be understood accordingly.
[5] 'Horizontal direct effect' is only meaningful as an attribute of a particular provision of Community law. In contrast, 'private accountability' is a notion divorced from a particular provision, though to be implemented it must be channeled through a provision having horizontal direct effect. For this reason, whilst the two labels will often overlap, the latter is generally preferred in this paper.
[6] This is clear from the application of articles 85 and 86 which by their terms target private parties. The Court has also interpreted more ambiguous Treaty provisions in this way: see Case 36/74 Walrave and Koch v Association Union Cycliste Internationale [1974] E.C.R. 1405 [1975] 1 C.M.L.R. 320 and Case 43/75 Gabrielle Defrenne v Société Anonyme Belge de Navigation Aerienne (Sabena) [1976] E.C.R. 455 [1976] 2 C.M.L.R. 98.
Some have doubted whether these two cases genuinely apply the provisions in question to purely private parties. The claim is that the parties in question were linked to the Member State in such a way that they should not be seen as purely private bodies. The boundary between public and private in relation to article 30 is considered in the text accompanying notes 110 et seq. It is doubtful whether, even on an orthodox reading of the authorities on this question, the parties would be sufficiently 'public'. In Defrenne the company was a the national airline. In Walrave the only claim that can be made is that the rules in question derived force through the national legal system (see Evans, Economic Policy and the Free Movement of Goods in EEC Law, (1983) 32 I.C.L.Q. 577, 578).
The important point to note, however, is that neither of these supposed links to the State are relied upon, or even mentioned, in the cases. There is not even a cryptic reference characteristic of those cases conventionally associated with the public/private divide in this area. The reasoning employed is general in its terms. It is one argument to say that these particular cases could now be decided on the basis of their nexus to the State and another to argue that they were so decided.
A second objection to Defrenne is that the Treaty provision in question was of a special form. It imposes an obligation ('primary') upon the Member State to ensure the application of a principle, equal pay for equal work, which entails the imposition of an obligation ('secondary') upon private parties. The primary obligation was not held to be horizontally directly effective. It was only the secondary obligation, which by its terms applied to private parties, that was accorded this effect. The source of this obligation was the Treaty provision. Even so, the special nature of this provision makes it a poor comparison.
This draws attention to a fundamental question. Articles 85 and 86 demonstrate that some Treaty provisions can apply to private parties. Does this suggest that the question of horizontal direct effect is purely a question of interpretation of the provision. The alternative is to say that, as a constitutional rule, only those provisions that are expressly and unambiguously addressed to private parties can have horizontal direct effect. This appears to reflect the position under the U.S. CONSTITUTION which only exceptionally, through the 13th Amendment (which abolished slavery and by its express terms addressed private parties), imposes obligations upon private parties: The Civil Rights cases 109 U.S. 3, 11 (1883). The debate has mainly taken place in relation to the 14th Amendment (due process and equal protection of law). The strictness of this formal stance has, however, been ameliorated by various means.
Cases such as Defrenne and Walrave are important in suggesting that such a constitutional rule does not exist and bar private accountability. However, the special nature of the provision in Defrenne suggests that it may occupy a hybrid, third category. Even so, this still leaves Walrave. This makes the question of what conditions for horizontal direct effect are imposed by this decision, an especially important one.
[7] (Emphasis Added). The parallel provision relating to exports is article 34 which reads, in material part: "Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States".
[8] Walrave, supra note 6, concerning articles 7, 48 and 59 which all feature a grammatical construction equivalent to 'shall be prohibited'. In Defrenne, supra note 6, even the opening words 'Each Member State shall' did not preclude horizontal direct effect. However, this effect was attributed to the secondary obligation and not to the primary obligation introduced by these words: see explanation in note 6.
[9] Beraud, Les mesures d'effet équivalent au sens des articles 30 et suivants du Traité de Rome, 1968 R.T.D.E. 265, 279 makes several of these arguments.
[10] Most important is article 12 dealing with customs duties and charges having an equivalent effect.
[12] This assumes, based upon the general definition of its task in article 164, that the Court is the ultimate interpretative authority for articles 30-36. One must therefore note Commission Directive 70/50/EEC (OJ 1970 L13/29) which purports to define the concept of a "measure" for article 30. It includes "all instruments issuing from a public authority" (Preamble) but makes no reference to private parties. However, whilst the Court has often referred to the Directive, and clearly regards it as persuasive in its interpretation of article 30, it has taken a stricter stance than that in the Directive on a number of occasions. Typically the Court uses language such as "as mentioned in the Directive" (see Case 103/84 Commission v Italy (vehicle subsidies) [1986] E.C.R. 1759, recital 20). This recognizes that the Court remains the final authority on the interpretation of articles 30-36. The Directive was issued under article 33(7) which requires the Commission to issue Directives setting out the "procedure" and "timetable" for abolition of existing "measures ... which have an effect equivalent to quotas". Thus in purporting to define the notion of a "measure" for article 30 the Commission must be regarded as merely expressing an opinion (this seems to be the view expressed by OLIVER supra note 1, at 71).
The view that article 30 does not apply to private activity has been repeated on behalf of the Commission in response to questions from the Parliament: see OJ 1980 C156/11 and OJ 1983 C93/1 and most emphatically, in relation to promotional activities, OJ 1982 C333/11.
[14] Id. recital 18, which deserves quotation in full: "The abolition as between Member States of obstacles to freedom of movement for persons and to freedom to provide services, which are fundamental objectives of the Community contained in Article 3(c) of the Treaty, would be compromised if the abolition of barriers of national origin could be neutralized by obstacles resulting from the exercise of their legal autonomy by associations or organizations which do not come under public law."
[17] Id. at recital 39. This echoes the expression 'imperative' which appears in Walrave, supra note 6, at recital 28.
[18] Case 13/76 [1976] E.C.R. 1333; [1976] 2 C.M.L.R. 578.
[20] Quinn and MacGowan, Could Article 30 impose obligations on Individuals?, (1987) 12 E.L.Rev 163, 177.
[21] Supra note 6, recital 18.
[22] Walrave, supra note 6, at recital 4
[23] This second possible limitation appears in recital 17 of Walrave, supra note 6, where the Court first addresses the issue of horizontal direct effect. The limitation is included in the summary of the holding cited in Dona v Mantero, supra note 18, at recital 17. It also appears to intrude into some parts of the reasoning in Defrenne, supra note 6, at recital 39.
[24] See, for example, GREEN, HARTLEY AND USHER, THE LEGAL FOUNDATIONS OF THE SINGLE EUROPEAN MARKET 146 n.25 (1991); Van Gerven, The Recent Case Law of the Court of Justice [1977] C.M.L.Rev. 5, 23 and the discussion in S. Weatherill, Discrimination on Grounds of Nationality in Sport, (1989) 9 Yearbook of European Law 55, 65 et seq.
[25] BURROWS, FREE MOVEMENT IN EUROPEAN COMMUNITY LAW 131 (1987) and, at least as regards article 7 EEC, see CONSTANTINESCO, JACQUÉ, KOVAR AND SIMON, TRAITÉ INSTITUANT LA CEE 66 (1992); SMIT AND HERZOG, THE LAW OF THE EUROPEAN ECONOMIC COMMUNITY - A COMMENTARY s.7-05.
[26] Some commentators have come close to making this leap, see Van Gerven, supra note 24, p.21.
[27] Case 8/74 Procureur du Roi v Benoit and Gustave Dassonville [1974] E.C.R. 837.
[28] This reflects the Court's similar view of these articles in Case 7/68 Commission v Italy [1968] E.C.R. 423.
[29] For example, Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung fur Branntwein (Cassis de Dijon) [1979] E.C.R. 649. A clear example is provided by the recent case, Cases 267-8/91 Criminal Proceedings against Bernard Keck and Daniel Mithouard [1993] I E.C.R. 6097where the Court retreated from the breadth of its earlier doctrine, and did so by limiting the interpretation of the Dassonville formula.
[30] Cases 266-267/87 R v Pharmaceutical Society of Great Britain ex parte Association of Pharmaceutical Importers and others [1989] E.C.R. 1295 [1989] 2 C.M.L.R. 751; Case 222/82 Apple and Pear Development Council v Lewis [1983] E.C.R. 4083 [1984] 3 C.M.L.R. 733; Case 249/81 Commission v Ireland ("Buy Irish") [1982] E.C.R. 4005 [1983] 2 C.M.L.R. 104.
[31] Case 311/85 VZW Vereniging van Vlaamse Reisbureaus v VZW Sociale Dienst van de Plaatselijke en Gewestelijke Overheidsdiensten [1987] E.C.R. 3801.
[32] Case 177-8/82 Officier van Justitie v Van de Haar and Kaveka [1984] E.C.R. 1797.
[33] The development of this doctrine is analyzed in HENRIKSEN, ANTI-COMPETITIVE STATE MEASURES IN THE EUROPEAN COMMUNITY (1994).
[34] Even so, such dicta are often regarded as having determined the issue: See, for example the case note on Vlaamse at [1987] E.C.L.R. 208, 300.
[35] Case 58/80 Dansk Supermarked A/S v Imerco A/S [1981] E.C.R. 181, recital 17. On close examination this statement is not as emphatic as it is often suggested to be. The reference is to agreements which are uncontroversial in the context of article 85. The ruling was that agreements violating the free movement principle could not be relied upon to establish unfairness of competition. Thus the free movement principle operates only as a secondary concept an does not target private parties directly. For a more extensive attempt to understand this dictum see Marenco, Competition between National Economies and Competition between Businesses - A Response to Judge Pescatore, (1987) 10 Fordham Int'l Law Journal 420, 426.
[36] Case 119/75 Terrapin v Terranova [1976] E.C.R. 1039 [1976] 2 C.M.L.R. 482; Case 3/78 Centrafarm v American Home Products Corporation [1978] E.C.R. 1823 [1979] 1 C.M.L.R. 326; and Case 155/73 Giuseppe Sacchi [1974] E.C.R. 409 [1974] 2 C.M.L.R. 177.
[37] Cases 56 and 58/64 Consten and Grundig v Commission [1966] E.C.R. 299; Case 24/67 Parke, Davis and Co. v Proebel [1968] E.C.R. 55; Case 40/70 Sirena v Eda [1971] E.C.R. 69. It is unsurprising since article 85 addresses private parties.
[38] This was apparently the position taken by F. Jacobs, Industrial Property and the EEC Treaty - A Reply (1975) 24 I.C.L.Q. 643, 645 who says, "There is no question of whether a member State is complying with its treaty obligations" and later, "... what is in issue is the use made of national laws by manufacturers and distributors" (p. 646).
[39] It is hard to square the term "exercise" with this view. Even so, this terminology is now rare (see G. Tritton, Articles 30 to 36 and Intellectual Property: Is the Jurisprudence of the ECJ now of an Ideal Standard? [1994] E.I.P.R. 422 for an interesting discussion of the various labels and doctrines employed in this field). The distinction can be rationalized as reflecting a jurisprudential distinction between those rights that form the core of the notion of the intellectual property, and those which do not. Those rights inherent in the form of intellectual property protection are regarded as forming part of its existence, whilst more peripheral aspects are assigned the label exercise. The labels and the distinction are not especially compelling in this picture, they merely serve as an instrument to justify encroaching upon certain elements of the rights conferred by national law. An alternative explanation attributing some theoretical content to the terms is provided by G. Friden, Recent Developments in EEC Intellectual Property: The distinction between existence and exercise revisited [1989] C.M.L.Rev. 193.
Despite these difficulties this view is now the orthodox position: see Advocate General Trabucchi in Winthrop, post note 41, and Advocate General Warner in Cases 55-57/ 80 Musik Vertrieb v GEMA [1981] E.C.R. 147. Also, for example, Alexander, Droit Communautaire et droit national des marques, 1976 Cahiers de Droit Europ. 411, 445; Joliet and Delsaux, Le Droit d'auteur dans la jurisprudence de la Cour de justice des Communautés europeénes 1985 Cahiers de Droit Europ. 389; Koch, Article 30 and the Exercise of Industrial Property Rights to Block Imports, 1986 Fordham Corp. Law. Inst. 609; Oliver, A Review of the Case Law of the Court of Justice on Articles 30 to 36 EEC in 1984, (1985) 22 C.M.L.Rev. 301, 323.
[40] Case 78/70 Deutsche Grammophon GmbH v Metro-SB-Grossmarkte GmbH [1971] E.C.R. 487. Recital 13 states the mechanics as follows: "... it would be in conflict with the provisions prescribing the free movement of products within the Community for a manufacturer ... to exercise the exclusive right ... conferred on him by the legislation of a member State ...".
[41] See, for example, Case 16/74 Centrafarm v Winthrop [1974] E.C.R. 1183, in particular compare the emphasis in recitals 9 and 12.
There is another way in which the case may support the view that the target is private action. Though of little normative value due to its technical nature, this aspect of the case still confirms the uncertainty initially associated with the dichotomy. The case, which concerned attempts to ban parallel imports of trade marked goods, arose before the expiry of the deadline for abolition of existing measures equivalent to quantitative restrictions which governed Britain's accession. The Court's reasoning is opaque, but it held that the exercise of the trade mark right to ban importation would contravene the free movement of goods principle. This is inconsistent with 'exercise' being linked only to the national legislation since, if this was its so, the measure would have been acceptable at that time (the position suggested by Advocate General Trabucchi). Hence the decision is taken by some to establish that the 'exercise' in issue must be that of the private party: Usher, Duties imposed on individuals under the EEC Treaty, in FUNDAMENTAL DUTIES (Lasok ed., 1980) and GREEN, HARTLEY AND USHER, supra note 24, p.53.
[42] For an excellent defense of this position see Marenco and Banks, Intellectual Property and the Community Rules on Free Movement: Discrimination Unearthed (1989) 15 E.L.Rev 224, 225. This usage is is most manifest where the final section of a judgment makes clear the true sense of the shorthand employed to that point: see, for example, Case 19/84 Pharmon v Hoechst [1985] E.C.R. 2281.
[43] This is noted by White, In Search of the Limits to Article 30 of the EEC Treaty, (1989) 26 C.M.L.Rev. 235, 265-270. For example, Case 10/89 CNL-SUCAL v Hag (Hag II) [1990] 1 E.C.R. 3711 seems to adopt this approach almost exclusively.
[44] Case 9/93 Iht Internationale heiztechnik gmbh and uwe danzinger v ideal-standard gmbh and waco standard gmbh
[45] White, supra note 43 at p. 268, describes this as "practically the same" as private accountability in this sphere. See also Cohen Jehoram, The Delicate Balance between Industrial Property and European Law: The Law as it Stands [1976] 2 L.I.E.I. 71, 78. The authorities for this view are Allen and Hanburys v Generics, post note 227, and Dansk Supermarked, supra note 35.
This had been the subject of some debate: see Johannes, La propriété industrielle et le droit d'auteur dans le droit des communautés europeénes, 1973 R.T.D.E. 369, 387; Joliet, Patented Articles and Free Movement of Goods within the EEC, Current Legal Prob. 15, 26; Barents, New Developments in Measures having an Equivalent Effect, (1981) 18 C.M.L.Rev. 271, 275. Some have suggested that one decision alone is not enough, but that the national court must establish a "permanent jurisprudence": Koch, supra note 39, at 610; also OLIVER, supra note 1, at 39.
[46] OLIVER, supra note 1 at 55: private accountability, he says, "cannot yet be completely ruled out".
[47] L. GORMLEY, PROHIBITING RESTRICTIONS ON TRADE WITHIN THE EC 259 (1985) stating that "the position of private parties is still not firmly decided", though he also suggests that the probable outcome of any case on point would be to deny private accountability.
[48] This seems to be the tenor of the discussion at p. 53-55 of GREEN, HARTLEY AND USHER, supra note 24 and emerges as the backdrop for the discussion by Quinn and MacGowan, supra note 20, see esp. p. 166.
One product of this ambiguity is that it is often troublesome to distinguish arguments in favor of developing private accountability from arguments that accountability is established. A blend of both forms of argument, with limited policy input, seems to be most common.
[49] See generally, H. SCHERMERS, JUDICIAL PROTECTION §29-41 (5th ed. 1992); L. BROWN, THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITES 316-322 (4th ed. 1994). The most classic indication of this approach is Case 26/62 Van Gend en Loos v Nederlandse Administratie der Belastingen [1963] E.C.R. 1.
[50] It has been noted that the Court has not often applied this approach to the scope of article 30: Chalmers, Free Movement of Goods within the European Community: An Unhealthy Addiction to Scotch Whisky?, (1993) 42 I.C.L.Q. 269, 270. The result has been some chaos: Evans, Economic Policy and the Free Movement of Goods in EEC Law, (1983) 32 I.C.L.Q. 577, 591; and Barents, New Developments in Measures having an Equivalent Effect, (1981) 18 C.M.L.Rev. 271, 272.
[51] This might be supported by referring to Dassonville, supra note 27, and Commission v Italy, supra note 28. These cases establish the orthodox position yet can be employed to argue that this narrow 'purpose' has been adopted by the Court.
[52] Lasok, IPR and Free Movement in the EEC, [1985] E.C.L.R. 249 goes further than most in analysing the background to the provisions he then considers. However, he assumes that the subject of articles 30-34 is State intervention in trade (p. 260). Thus, if applied to the issue developed in this paper, his starting point would be unhelpful. A standard form of reasoning is to acknowledge the ambiguity of the label 'free movement of goods' and yet to assume as the one fixed point that it encompasses only State measures, see for example, Meij and Winter, Measures having an Effect Equivalent to Quantitative Restrictions, (1976) 13 C.M.L.Rev. 79, 82. This form of reasoning is acceptable only when working within the bounds of State measures and must be rejected for the enquiry in this paper.
[53] Chalmers, supra note 50, takes the same starting point in his approach to the limits of article 30, though he finds it unnecessary to go into the theory underlying a common market.
[54] Case 270/80 [1982] E.C.R. 329.
[55] Id. The Court contrasted this approach to that to be employed in relation to a Free Trade Agreement with a third country. For the Court's interpretation of the objectives and activities of the Community: see text at note 59.
[56] So too the view that article 30 must have a single purpose whilst checks are introduced to this through article 36 to represent conflicting interests. The complexity of the case law on article 30 in relation to State action demonstrates the inadequacy of this view.
[57] Wils, The Search for the rule in Article 30 EEC: much ado about nothing?, (1993) 18 E.L.Rev. 475, 4789 describes a similar approach to interpreting which forms of State measure are prohibited by article 30. Wils starts with the "factual economic matter" and its weight that make up the "anti-integrationist" effect of a measure which is then balanced against its "valued regulatory effect".
[58] SINGLE EUROPEAN ACT 1986. This amendment reflected a reaffirmation of, and a deepening of emphasis upon, the common market scheme: see, for example, A. MATTERA, LE MARCHÉ UNIQUE EUROPÉEN 14 (2d ed. 1990).
[59] Polydor v Harlequin, supra note 56, recital 16.
[60] Case 15/81 Gaston Schul v Inspecteur der Invoerrechten en Accijnzen [1982] E.C.R. 1409, at recital 33.
[61] Chalmers, supra note 51, rightly describes the relationship as one of analogy to a domestic market (see also KAPTEYN AND VERLOREN VAN THEMAAT, supra note 3, at p. 78).
[62] Supra note 3, at p. 78 (Emphasis added).
[63] There are many accounts describing the political aspect of the creation of the EEC. Insofar as the Member States established an economic community, however, trade theory can provide an insight into their aims. Other aspects and goals of the Community act as a brake to these purely economic aims, but they still provide a starting point. Modern economic presentations of the subject do not differ radically from the state of the theory in the formative years: see for example, SCITOVSKY, ECONOMIC THEORY AND WESTEN EUROPEAN INTEGRATION esp. 19-48 (1958).
[64] EMERSON, THE ECONOMICS OF 1992: THE EC COMMISSION'S ASSESSMENT OF THE ECONOMIC EFFECTS OF COMPLETING THE INTERNAL MARKET (1982). This analyses the results of the research performed by Cecchini on behalf of the Commission into the likely gains of the internal market programme. The Research, "The Costs Non-Europe" is also summarised in CECCHINI, THE EUROPEAN CHALLENGE 1992 (1988).
[65] See, for example, Case 207/83 Commission v UK (Origin Marking) [1985] E.C.R. 1201, at recital 17.
[66] I am adopting these labels in what appears to be their conventional meaning (see. W. MOLLE, THE ECONOMICS OF EUROPEAN INTEGRATION 10 (2d ed. 1994). They are occassionally employed differently, as by NEVIN, THE ECONOMICS OF EUROPE 55-57 (1990).
[67] The Treaty states that the Community shall be based upon a customs union (article 9, the first provision of the Title dealing with the free movement of goods). Even so, one must consider first the more fundamental notion of a common market and refine the enquiry from there, even if this returns to more basic elements.
[68] At a theoretical level, supposing perfect competition, factor mobility would substitute for free trade, and vice versa. Whether in practice this relationship of substitution becomes one of compliment is a debated issue: see MOLLE supra note 66 at p.168-170. What is clear is that factor mobility does not fundamentally alter the breakdown of the aims of free trade through customs union.
[69] Rather the further integration is demanded by the increased interdependence of the national economies, and brings about greater stability rather than a change in that structure: MOLLE supra note 67 at p. 11, 390; HITRIS, EUROPEAN COMMUNITY ECONOMICS 51 (2d ed 1991).
[70] For a rare reference to private activities in such a study see R. BALDWIN, NONTARIFF DISTORTIONS OF INTERNATIONAL TRADE 11 (1970). He included private procurement policies discriminating against foreign products within his description of nontariff distortions. However he went on to refine the scope of his studies to governmental measures due to the absence of detailed information and the unlikelihood of change concerning private sector distortions (p. 13).
[71] MOLLE, supra note 67, Part II; A.M. EL-AGRAA, THE ECONOMICS OF THE EUROPEAN COMMUNITY Chapter 4 (3d ed. 1990); Pomfret, The Theory of Preferential Trading Arrangements, in THE EUROPEAN INTERNAL MARKET (Jacquemin and Sapir eds. 1989).
[72] Some have preferred alternative terminologies, such as 'short-term effects' and 'long-term restructuring effects' used by MOLLE, supra note 67, or 'barrier removal effects', 'integration effects' and 'genuine dynamic effects' used by HITRIS supra note 70.
[73] The negative aspect, mentioned for the sake of completeness, is that a customs union retains protectionism against the outside world. This will lead to trade diversion, the re-allocation of imports from the rest of the world to partner States which are less efficient, but are protected by external tariffs.
[74] MOLLE supra note 67, at p. 110.
[75] A sophisticated argument indicates that the existence of a broader marketplace will also benefit the domestic market by allowing undertakings to pursue aggressive strategies (such as expansion of capacity) in both markets simultaneously when such policies would not have been effective within the domestic market alone:see N. OWEN, ECONOMIES OF SCALE, COMPETITIVENESS, AND TRADE PATTERNS WITHIN THE EUROPEAN COMMUNITY 14-20 (1988) The U.S. example has often been cited as evidence of this effect (p. 2).
[76] This recalls article 3(f) EEC (now article 3(g) TEU) which refers to the establishment of a system to ensure that competition is not distorted. This is embodied, in part, in articles 85 and 86.
[77] It should be noted that similar arguments apply to goods imported into the customs union which then circulate freely. Obstacles to this process give rise to analogous detriments and so are not discussed independently.
[78] This point is considered further in note 100.
[79] Young and Metcalfe, Competition Policy, in THE ECONOMICS OF THE EUROPEAN UNION (Artis and Lee eds. 1994); AREEDA AND KAPLOW, ANTITRUST ANALYSIS 7 et seq.(4th ed 1988). Indeed, the models assume perfect competition and recognize that any departure from this theoretical utopia will produce corresponding reductions in the gains realized. Hence the removal of barriers to competition has similar effects to the removal of barriers to trade: MOLLE supra note 67, p. 362.
[80] This mirrors the demand for such policies at a national level in order to ensure the realisation of the gains thought to derive from a market economy. See sources in note 82.
[81] BALDWIN, supra note 70, provides some support for this view, though the suggestion was not developed.
[82] One element of Community competition policy which makes it unconventional, and reflects the same concerns as are raised here, is considered below: text accompanying note **.
[83] This is the idealized form of the argument. Most writers dealing with this subject, traditionally in relation to racial or sex discrimination, recognize some of the counter-arguments discussed below. For a relatively pure form of the argument see R. POSNER, THE ECONOMICS OF JUSTICE Chapter 12 (1981).
[84] This appears in article 86(c). See BELLAMY AND CHILD, COMMON MARKET LAW OF COMPETITION ¶ 9077 (4th ed. 1993).
[85] This is one possible interpretation of cases such as Pharmaceutical Society, supra note 29.
[86] Consider in particular the cases mentioned in note 99 et seq.
[87] The foundational account of how discrimination can be profit-maximizing was given by G. BECKER, THE ECONOMICS OF DISCRIMINATION (1st ed. 1957). He applies the notion of 'taste for discrimination' to a variety of situations, including consumer preferences (Chapter 5). The development of this theory is discussed in Marshall, The Economics of Racial Discrimination: A Survey, (1974) 12 J. Econ Literature 849.
[88] A number of the suggestions made here echo the discussion in MacIntosh, Employment Discrimination: An Economic Perspective, (1987) 19 Ottawa L. Rev. 275, esp. 295-310.
[89] An economic answer to this would be that the rule is costly to administer and may be counter productive. Even so, this case is not an easy one to make. See Posner, An Economic Analysis of Sex Discrimination Laws, (1989) 56 Univ. Chicago L.Rev. 1311 where the author argues that the reduction in the incidence of sex discrimination in the U.S. need not be related to the existence of legislation.
[90] The trade union is not generally regarded as an 'undertaking' for these purposes: BELLAMY AND CHILD supra note 85, at ¶ 2007. It is arguable that this makes the collective agreements that it concludes likewise outside the article since there is no agreement between undertakings. This is an uncertain propostion, but if it were to be established then there would be a greater lacuna.
[91] The de minimis rule is considered in the text accompanying note 291. The positioning of a de minimis rule for the whole of article 85 is unlikely to reflect an the appropriate rule for the more specific sub-set of private actions which might be targeted by the free movement of goods provisions.
[92] See the sources in note 82 and D. GOYDNER, EC COMPETITION LAW Chapter 2 (2d ed. 1993). Community competition policy must, as a matter of jurisdiction, focus on activities that affect intra-Community trade. At the same time national competition policy is relied upon to ensure workable competition at the national level, even though this is also necessary to the realisation of the full gains associated with the common market.
[93] This distinction is widely accepted. See BELLAMY AND CHILD, supra note 85, at ¶ 1072 to ¶ 1073. The Commission recognised this role early on, see the Commission's First Report on Competition Policy (1972), at p.13. This second thread has been described as innovative in the world of competition law: Allen, Managing the Common Market: The Community's Competition Policy, in POLICY-MAKING IN THE EUROPEAN COMMUNITY (H. Wallace, W. Wallace and C. Webb. eds. 1983).
[94] Consten and Grundig v Commission, supra note 38. The formula is now standard, see, for example, Case 229/83 Leclerc v Au Blé Vert [1985] E.C.R. 1.
[95] Consten and Grundig, supra note 98. See also Case 96/82 IAZ v Commission [1983] E.C.R. 3369. This principle is routinely applied by the Commission beyond the obvious instances such as parallel importing: see, for example, Commission Decision French inland waterway charter traffic: EATE Levy OJ 1985 L219/35 at paragraph 47.
[97] Pescatore, Public and Private Aspects of European Community Competition Law, (1987) 10 Fordham Int'l L. J. 373, makes a similar argument that the rules on competition and those on the free movement of goods have a common basis, though he locates this in the notion of "fair competition" found in articles 3(a) and (f) EEC.
[98] See supra, text accompanying note 97.
[99] This starting position suggests that measures which do not affect the competitive relationship, but which simply diminish the volume of intra-Community trade, should not be considered further. Against this view it can be argued that even a reduction in volume reduces the scope for economies of scale and for larger enterprises, the last two of the dynamic effects identified above in the text following note 74.
On the other hand, such measures do not appear to weaken the other suggested effects, namely the advantages derived from increased competition, both static and dynamic. Further, measures which affect volume of trade without distorting the competitive plain are likely to have only a minimal influence on economies of scale and on the size of enterprises. The balancing of this limited economic impact of such a measure against State autonomy and regulatory values (see text following this note) is likely to routinely favor the latter. Accordingly one can generalize this observation into a rule that such measures do not violate article 30 (Wils, supra note 63, recognises that a balancing process cannot be performed in its entirety in each case, but must be employed to formulate a rule or standard).
It appears that this form of analysis can provide a theoretical rationale for the intuition reflected in the recent Keck decision (supra note 28). That case accords different treatment to measures governing "selling arrangements". These are excluded from article 30 unless they are discriminatory, in law or fact (for a view upon this test and an alternative see text at note 228 ). In determining the boundary to the concept of "selling arrangements" it is suggested that this theoretical analysis may prove useful.
The complications of such a two tier approach justify the simplification that appears in the text. The economic impact of similar measure of private origin would be so clearly outweighed by considerations of private autonomy that the point is not worth pursuing.
[100] Wils, supra note 63, constructs a similar balance.
[101] Wils, supra note 63, incorporates only the "valued regulatory effect of the national measure", comprised of its objective and effectiveness. This formulation reflects only the Community interest and ovrelooks the value in the autonomy of each State. The appropriate balance of these interests might indeed demand that only State measures pursuing objectives that conform to Community standards are permissible. However to incorporate this into the model tends to prejudge the issue. This is made clear by reference to the parallel situation of private action where autonomy independent of the objective legitimacy of each action, must clearly be admitted into the model. Gormley, Some Reflections on the Internal Market and Free Movement of Goods, [1989] 1 L.I.E.I. 9,16 refers to the "right of Member States, in the absence of Community legislation occupying the field, to enact measures for the regulation of local economic life" (emphasis added). This makes clear the relevance of State autonomy and its relation to Community interest. See, for example, Cases 60-61/84 Cinéthèque v Fédération nationale des cinémas français [1985] E.C.R. 2605, where the Court must be understood as accepting the right to regulate though within the limit that the regulation must apply without distinction to domestic and imported goods.
[102] Wils, supra note 63, at p. 479 et seq.
[103] See, for example, Case 113/80 Commission v Ireland [1981] E.C.R. 1625.
[104] Waelbroeck, Les rapports entre les règles sur la libre circulation des merchandises et les règles de concurrence applicables aux enterprises dans la CEE, in LIBER AMICORUM PIERRE PESCATORE (1987).
[105] Van Gerven, supra note23, at 24.
[106] GREEN, HARTLEY AND USHER, supra note 23, at 55.
[108] The exception is Waelbroeck, supra note 106, whose test of intentional action is derived in particular from Terrapin v Terranova (supra note 37) which is considered in the text accompanying note 129.
[109] This assumes the point argued in the text accompanying note 20, that the Court did not in these cases lay down any general conditions for horizontal direct effect.
[110] It is an issue that surfaces at many points in national administrative law. For example, concerning English law, see P. CRAIG , ADMINISTRATIVE LAW 564 et seq. (3d ed. 1994).
[111] Even a focus upon public functions must acknowledge that there are certain bodies, such as the legislature, central and even local government (regarding the latter, see Case 45/87 Re Dundalk Water Supply Scheme: Commission v Ireland [1988] E.C.R. 4929), whose position alone makes all of their actions sufficiently public. Function need not be the sole criterion of the public sphere. Moreover, there are organizations that operate exclusively as agents of the State (see Buy Irish, supra note 29).
[115] Case 152/84 Marshall v Southampton and South West Hampshire A.H.A. [1986] E.C.R. 723; Case 188/89 Foster v British Gas [1990] E.C.R. 3313.
[116] Marshall, supra note 117, applying Directive 76/207/EEC concerning equal treatment in employment.
[117] The estoppel rationale appeared first in Case 148/78 Pubblico Ministero v. Ratti [1979] E.C.R. 1629.
[118] In relation to the horizontal direct effect of directives Advocate General Van Gerven has considered whether there may be a category lying between the extremes of State and individual, though he does not phrase this explicitly in terms of 'public functions': Opinion in Foster v British Gas, supra note 117, esp. paragraphs 9 and 10.
[119] Supra, note 29, where the issue is developed in recitals 14 to 16.
[121] Advocate General Darmon's opinion in Pharmacetical Society provides some support for this view. At recital 14 of his opinion he says "The Pharmaceutical Society therefore constitutes a professional body having as its task the provision of a public service in the public interest ... [Certain of its] rights and powers are radically different from those of ordinary private bodies".
Some commentators adopt a similar reading of the case that makes no reference to whether the body was part of the State or not: see, for example, W. ROTHNIE, PARALLEL IMPORTS, 376 (1993).
[122] The formal interpretation seems to be adopted in J. SHAW, EUROPEAN COMMUNITY LAW 275 (1993).
[123] See, for example, SHAW, supra note 124.
[124] Vlaamse Reisbureaus, supra note 31.
[125] Difficult questions to be faced within this framework include the status of State monopolies, public undertakings, and undertakings granted special rights (see articles 37 and 90).
A particularly interesting question concerns the technical standards issued by private bodies. The threat to the free movement of goods presented by these de facto rules was addressed in Council Directive 83/189/EEC of 28 March 1983 (OJ 1983 L109/8). Interestingly, a number of obligations of over-sight were placed upon Member States. The extent of these obligations has been increased in the recent amendments introduced by Directive 94/10/EC of 23 March 1994 (OJ 1994 L100/30): see now article 4 of Directive 83/189/EEC (as amended). One can speculate whether the institute would be bound by article 30 under the Pharmaceutical Society principle, especially given that its 'public' element is of Community origin. For an interesting study of this question see Lecrenier, Les articles 30 et suivants CEE et les procédures de contrôle prévues par la directive 83/189/CEE, 1985 R.M.C. 6.
[130] The expression 'direct' discrimination is often employed for the reasoning or process test. A good summary of the approaches is presented in the Introduction to ANTI-DISCRIMINATION LAW (McCrudden ed., 1991). The important elements to the meaning of 'discrimination' are defined in C. BOURN AND J. WHITMORE, RACE AND SEX DISCRIMINATION esp. 45-83 (2d ed. 1993) and C. PALMER, DISCRIMINATION AT WORK Chapters 2 and 4 (2d ed. 1992). In the U.S. the similar distinction is between 'disparate treatment' cases (also termed 'intentional discrimination' though they focus upon reasoning) and 'disparate impact' cases: see J. FRIEDMAN AND G. STRICKLER, THE LAW OF EMPLOYMENT DISCRIMINATION Chapter 2 (3d ed. 1993).
[131] This is the approach suggested by the U.K. case on sex discrimination, R v Birmingham City Council ex parte E.O.C. [1989] I.R.L.R. 172 (House of Lords). Aside from being difficult to apply, a test that did not require a causal link would target thoughts which did not influence action, and would obviously apply to situations in which the forbidden reasoning caused no damage.
[132] Regarding the first formulation see Strauss, Discriminatory Intent and the Taming of Brown, (1989) 56 Univ. Chicago L.Rev. 935, 956. This discussion focuses upon State action violating the equal protection clause of the U.S. Constitution, but the test proposed is evidently of wider application.
[133] Compare the position of State measures under article 30 where the breadth of the threshold criterion places a heavy emphasis upon justifications. Thus the Court has apparently developed an open ended set of justifications: see Cassis de Dijon, supra note 28.
[134] This recalls the discussion in the text accompanying note 84. The emphasis suggests that the same approach might appropriately be taken to those standards which tend to establish habits of compliance even without being legally binding.
[137] See also Case 237/82 Jongeneel Kaas v Netherlands [1984] E.C.R. 483 concerning a measure seeking only to improve the quality of domestic produce.
[140] The case involved other factors but this point emerges from paragraphs 38-9 of the Commissions decision (OJ 1985 L35/35 at 41). The point is noted by BELLAMY AND CHILD, supra note 85, at ¶ 4111.
[141] Gormley, Current Survey, The Common Market, (1984) 9 E.L.Rev 423, 424 recognizes that promotion by reference to national origin is common and yet is incompatible with the spirit of the common market. However, he accepts that the cases discussed in this section leave private parties' freedom of action unfetterred.
[142] Contrast the account given by Hunnings, Consumer Patriotism, 1983 Journal of Business Law 356, regarding the inclusion of governmental power in some form, even moral, as the central evil.
See also Nolin, La Condemnation par La CJCE des campagnes de promotion pour l'achat de produits nationaux, 1983 R.M.C. 460, 461. Nolin recalls the "think British" campaign and concludes that public and private campaigns can have the same effects. He suggests that the principle of free movement should prevail over formalism. For the Commission's view that this campaign could not be challenged, see OJ 1982 C333/11.
[143] The issue should be reconsidered if integration proceeds. Even so, there will always be a powerful argument in favor of retaining origin marks. In addition to the question of the producer's autonomy, consumers might be said to have a right to discriminate rather than simply a freedom from intervention. If so then there is an argument for permitting marks which afford them the means to exercise this right.
[144] Even so, the harm is not negligible: see Re Origin Marking, supra note 66, at recital 17.
[145] Although it would be possible to develop this definition into a test of reasoning it seems that practicality demands an objective test, asking how the indication would be perceived by the average consumer: would a consumer who had no predisposition to buy domestic produce find that the product presentation was an attempt to persuade them to do so (regardless of their reaction to this persuasion)?
[146] A complex case is presented by those products whose identity integrates their national origin. Examples include wine, real English butter, real German beer, etc. In such cases the reference to national origin can be understood as a legitimate product desciption and not as an appeal to prejudices. Hence the national origin may feature more prominently on such products without violating the proposed rule. These special cases should not detract attention from the vast majority of relatively simple cases.
[147] The formal discrimination test must also be rejected. In these situations it would be strange to target the store only when it openly justified its policy on illegitimate grounds. This distinction might be favored by legal certainty, but as a theoretical matter would seem fairly arbitrary. The compass of such a rule would be supported by theoretical considerations to such a limited extent that, if legal certainty suggested that this was the only form of the rule that was practical, it would be rejected on grounds of arbitrariness and injustice.
[148] Contra OLIVER, supra note 1, at p. 55.
[149] Where the goods carry a trade mark then there is often an issue whether the mark owner can ban parallel imports altogether (see American Home Products, supra note 37). Where different marks are used the parallel imports would be unrecognizable to the domestic consumers and thus are effectively excluded. The question becomes whether the parallel importer can switch marks. Even if permitted, this process will be costly to the parallel importer who may therefore be deterred from entering the market. Moreover, the extra cost will mean a that less of the price differential between the markets can be passed on.
[150] Even if the parallel importer cannot be prevented from repackaging the goods this remains a costly process that may deter those who might otherwise be able to import and undermine the price differential between the markets. Concerning the ability to ban parallel imports see Case 102/77 Hoffman-La Roche v Centrafarm [1978] E.C.R. 1139 and Case 1/81 Pfizer v Eurim-Pharm [1981] E.C.R. 2913.
[151] This expression refers to the non-physical elements of the product which contribute to its appeal, such as point of sale service, after sales service, and warranties, as well as product image. See Franzosi [1990] 2 I.I.C. 194. It is not clear whether, under Community law, differences such as these would entitle a trade mark proprietor to restrain parallel imports. The likely result appears to be that either the parallel importer provides an equivalent mix, or (more likely), that the import could be banned. In either case parallel importing becomes less likely.
[153] Id. at recitals 20-22. (Emphasis added). Some have doubted whether this remains a valid proposition of law. In Hoffman-La Roche, supra note 150, in relation to whether a trade mark proprietor is able to bar parallel imports of repackaged goods, the Court had referred to effect rather than intention in a similar context (though even this interpretation can be challenged: see Röttger, Article 36 - More subjective views on objectivity [1982] E.I.P.R. 215). Advocate General Capotorti in Pfizer, supra note 150, suggests that this objective test will generally apply and that the subjective test in American Home Products was to avoid a peculiarly restrictive result. On the other hand many commentators, including Van Empel (1979) 16 C.M.L.Rev. 251, 257; Röttger, AHPC and Centrafarm, The Court's Decision in the Light of its Earlier Rulings [1980] E.I.P.R. 322, esp. 326 believe that American Home Products reflects the considered form of the same doctrine, and that it would thus apply also to repackaging now. The case has recently been cited with apparent approval in the Pharmaceutical Society case, supra note 29. Hence, independently of whether it applies more broadly to repackaging, the doctrine appears to remain in place as stated. See further: text accompanying note 284.
[154] The Court subsequently directs the national court to determine whether the proprietor's 'purpose' was to partition the market (recital 23). No change in emphasis seems to be envisaged however.
[155] The Court's analysis of this point is influenced by its having moved too rapidly from the proposition that a difference in marks is the result of legitimate reasons, to the proposition that it cannot be over-ridden by the parallel importer. There is no necessary connection between these issues. One can accept that the difference is entirely justifiable and yet still argue that the interest in enabling the imported goods to compete with domestic goods demands that the importer can exchange the marks. What legitimate objection can the proprietor have to this process if the exchange is performed without affecting the product? On this view the 'remedy' for artificial partitioning must be sort elsewhere.
[156] Although the Court has never developed the definition, others have done so. For example, Hendry, Current Survey (1982) 7 E.L.Rev. 403, 406 prefers the approach taken by Advocate General Capotorti in Pfizer , supra note 150,which, he says, focuses upon objective factors and yet admits an element of subjectivity in interpreting their application to particular marketing schemes. This interpretation, blending objective and subjective features, appears to be captured by the practical application of the reasoning test proposed here. This point will become clearer when the question of proof is considered below (see text accompanying note 191).
[157] This term is common in decisions on intellectual property: see, for example, Hoffman-La Roche, supra note 150, at recital 10; Terrapin, supra note 37, at recital 7. As noted by Harris, The Application of Article 36 to Intellectual Property, (1976) 1 E.L.Rev. 515, 530, the test is circular when applied in this way. A practice does not violate article 36 by being artificial, but is rather labelled as artificial by violating the interpretation given to article 36.
[158] At first sight one might anticipate some guidance from the reference in article 85(1) to the "object" of distorting competition as a defining criterion in that sphere. However this has been interpreted as demanding an objective assessment of the aim of the agreement, rather than as referring to subjective factors (see BELLAMY AND CHILD, supra note 85, at ¶ 2097).
[159] See G. ANSCOMBE, INTENTION §5 (2d ed. 1963).
[160] See R. A. DUFF, INTENTION, AGENCY AND CRIMINAL LIABILITY esp. 47 et seq. (1990). Though focusing upon criminal law applications, this book provides develops, in Chapter 3, an interesting account of intention which can be applied more generally. The association of 'reasons for action' with 'intention' is in one sense only the start of the enquiry (p. 48), but provides sufficient insight to be useful here.
[161] This form of test has been applied in other areas. For example, according to one view, in the tort of inducing a breach of contract not only must the breach be intended (as partitioning - sometimes acceptable) but som must the harm to the plaintiff (as financial gain - makes the conduct unacceptable) even where it is an inevitable consequence. Here too intent can be regarded as closely related to cause. This has been well expressed by Cooke J.as follows: "An intent to harm a plaintiff's economic interests should not transmute the defendant's conduct into a tort ... unless that intent is a cause of his conduct .... If the reasons which actuate the defendant to use unlawful means are wholly independent of a wish to interfere with the plaintiff's business, such interference being no more than an incidental consequence foreseen by and gratifying to the defendant, we think that to impose liability would be to stretch the tort too far."( New Zealand Court of Appeal Van Camp Chocolates v Aulsebrooks [1984] 1 N.Z.L.R. 354). In contrast, English law is struggling to define the requisite element of intention: see Millar v Bassey (CA) LEXIS Transcript 12 July 1993.
[162] Stevenson, The European Court Passes the Buck - New Problems in Choosing Trade Marks, [1979] E.I.P.R. 61 discusses factors that may dictate the use of different marks.
[163] See Terrapin, supra note 37, which provides the example of discrimination in enforcement.
[164] Under such a generalization the notion of 'decision' would certainly be a point of contention. One can question, for example, whether maintaining the status quo is a 'decision' in the requisite sense. Once again, the relatively strict nature of the test provides the starting point. Only where there is some reasoning process can there be a decision in the appropriate sense.
Even though the reference here is to 'decisions' it should be emphasiezed that only those decisions that lead to action are of concern. For this reason the terms decision, activity, action and conduct may all be used to describe the subject of the prohibition.
[165] See the rules of origin of the Common Customs Tariff (see Regulation 802/68, JO 1968 L148/1).
[166] This label is preferable because it captures the sense of the principal case.
[167] Given the enormous generalisation involved, it is difficult to imagine many stereotyps drawn upon national lines that can provide any useful information.
[168] These products were discussed as a special category in relation to promotional activity: see note 152.
[169] There is a further difficulty which is also solved by focusing upon neutrality. In most situations to decide upon grounds of national origin will result in a clear harm to the products discriminated against. Hence it has not been necessary to develop the notion of adverse impact, an essential element of discrimination. However, the situations considered in this section might be thought to raise that issue. Some decisions will result in no apparent adverse impact to one group. For example, the decision to stock French and German wines separately treats them equally, and does not appear to harm one. Even so, some adversity can often be found, for example in the claim that casual purchasers tend to purchase French wines because they are stacked close to the door. To exclude such cases from the rule, one can condition its application upon a further factor. One possibility is to require a motive to prefer one group, as opposed to neutrality. Certainly, this is a vague test, but its importance should not be exagerrated. The scenario under discussion concerns only those exceptional products whose national origin and identity are inter-related.
[170] One way to conceive this test is as follows. The only permissible factors are those which affect the nature of the good, where its nature is understood in terms of its context as well as its physical nature. A powerful example of the relevance of context is provided by goods incorporating recycled components. Here one feels that two products that are physically identical are in a deeper sense distinct. The test of sufficient proximity might attempt to develop this understanding in a more general way. Hence the way in which fish are caught might be said to affect the nature of the product in a way that the foreign policy of the State of origin does not.
[171] This is not the same as a discretion to judge whether a certain policy applies on particular facts, but an authority to distinguish solely on grounds of national origin.
[172] One might make the following argument that this analysis ignores the doctrine of the supremacy of Community law. The rule of private accountability is a Community norm independent of the special rules upon State measures under articles 30-36. Thus whenever a national law purports to authorise a violation of that Community norm, the Community law should prevail. This should be so independently of whether that national law is justified under articles 30-36 since the concern is a conflict with a different Community norm.
However, the analysis above is consistent with supremacy if greater care is taken in defining the respective norms. The private accountabilty principle prohibits certain forms of reasoning. The only conflicting national norms are those authorising these forms of reasoning. Only these should be disapplied. The private party does not invoke this law itself but simply explains that it was basis for the decision, to the exclusion of national origin itself. He does not raise national law as a substantive defense.
[173] See, for example, Case 355/85 Driancout v Cognet [1986] E.C.R. 3231. This is often termed the principle of 'reverse discrimination'.
[174] BELLAMY AND CHILD, supra note 85, at ¶ 8037. Such an argument can draw some support from dicta in other areas where the Court has incorporated the intention of private parties into its formulation of Community law. See, for example Leclerc v Au Blé Vert, supra note 98 at recital .
[175] This point is made by Marenco and Banks, supra note 43, at p. 227.
[178] Article 90(2) reads: "Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules in contained in this Treaty, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the Community."(Emphasis added).
[179] Some attempt to disentangle Sacchi was made in Case 260/89 Elliniki Radiofonia Tileorassi Anonimi Etairia (ERT AE) v Dimotiki Etairia Pliroforissis and Sotirios Kouvelas ***. The Court there looked at the free movement of goods provisions only after considering the application of article 90(2). It appears that the Court in Sacchi did consider the undertaking to be one covered by article 90(2), though it refers to this only after its statements about free movement of goods. This article clearly addresses undertakings directly. However, it should be read as granting a limited exception to the undertaking, rather than as extending otherwise inapplicable provisions of the Treaty. It does not appear to apply to private undertaking those provisions otherwise addressed only to States. In particular, the last sentence appears to operate as a qualification to the exception, rather than as an independent principle (BURROWS, supra note 24, at p. 107). Any accountability under the free movement of goods principles in this context must be therefore have been derived solely from provisions of general application, articles 30-36.
[180] ENCLYCLOPEDIA (Sweet & Maxwell) B10-017.
[181] Many commentators who consider this area do not regard it as necessary to delineate strictly between the actions of the undertaking and those of the Member State. See, for example, Chalmers, Current Survey, (1992) 17 E.L.Rev. 248, 253 who describes the purpose of article 90(2) as being to grant a margin of discretion to Member States.
[183] A hybrid view does appear in Advocate General Lenz's opinion in Elliniki, supra note 185. He argues that the provisions on the free movement of goods apply only where the monopoly's conduct can be attributed to the State. Independent decisions of the monopoly are not to be considered under article 30. In other words, there is no need to determine whether the monopoly is for all purposes an adjunct of the State. Rather one looks at the particular action.
[184] Indeed, this is the principle that underlies article 90 as a whole: it attempts to balance the free movement of goods with the State's interest in using some undertakings as policy conduits: see Case 202/88 France v Commission [1991] I E.C.R. 1223.
[185] This framework closely resembles the position in U.S. employment discrimination cases, under Title VII Civil Rights Act 1964, where 'disparate treatment' is alleged: This approach was developed by the Supreme Court in McDonnell Douglas v. Green, 411 U.S. 792; Texas Depatment of Community Affairs v. Burdine, 450 U.S. 101.
[186] A further objection relates to the scope of "discovery" as part of the procedure for the suit. An embittered party might sue in the hope of ultimately discovering evidence of discrimination though none was presently apparent. This problem arises in many contexts and is generally answered by the availability of early judgment dispensing with the case at a preliminary stage if there is no case to answer. Where the decision appears to be perfectly rational, and to reflect the reasons provided, then early judgment might be appropriate.
[187] Daughtrey, Recent Decisions, [1979] Vanderbilt Journal of Transnational Law 467, 473 criticizes the American Home Products Corporation reference to intention as enabling liability to be escaped through a simple claim of inadvertence. On the other hand, Harris (1979) 4 E.L.Rev. 379, 387 notes as a result of that decision, that traders should "consider with utmost care" their choice of marks.
[188] In this discussion I shall refer to 'article 7 EEC' since this is the manner in which the provision is referred to in the materials considered.
[193] Eg. Sweet & Maxwell supra note 180; KAPTEYN AND VERLOREN VAN THEMAAT, supra note 3 at 93. Compare CONSTANTINESCO ET AL, supra note 25, at 66, describing the position as open; and SMIT & HERZOG, supra note 25, at s.7-04. An alternative was suggested by Sundberg-Weitman, Addressees of the Ban on Discrimination enshrined in Article 7 of the EEC Treaty, (1973) 10 C.M.L.Rev. 71, 79.
[194] Case 22/80 Boussac v Gerstenmeir [1980] E.C.R. 3427; Case 152/73 Sotgiu v Deutsche Bundespost [1974] E.C.R. 153.
[195] An argument similar to that developed in this paper in relation to articles 30-36 can be applied to support a less intrusive test for the application of article 7 EEC to private parties.
[196] Case 31/78 Bussone v Italian Ministry for Agriculture and Forestry [1978] E.C.R. 2446 where differentiation according to national location of packing centers was not discrimination within the scope of article 7 EEC. In Case 92/92 Phil Collins v Imtrat, the Court demanded that distinctions be made "according to objective criteria and without regard to nationality".
[197] Or, it seems, Community measures: Case 8/77 Sagulo, Brenca and Bakhouche [1977] E.C.R. 1505.
[198] Lasok, supra note 52, argues that 'quantitative restrictions' and 'measures having equivalent effect' are conceptually distinct and aim cumulatively to prohibit more than simple quantitative restrictions and their close analogues.
[199] Cases cited supra notes 27, 29 and 101.
[200] It seems that the Community Institutions are bound under article 30 and yet may be subject to specialized rules: Cases 80-81/77 Commissionaires Réunis v Receveur des Douanes [1978] E.C.R. 927 where the Community was held to be bound by the free movement of goods principle, though the Court did not specify the source of this obligation. See Barents, supra note 50, at 275; Oliver, La legislation communautaire et sa conformité avec la libre circulation des marchandises, 1975 Cahiers de Droit Europ. 245.
The possibility also exists for private parties to be bound simply by a 'general principle' analogous to article 30 but not tied thereto. However, this seems to be an unnecessary abstraction since article 30 provides an uncomplicted anchor for such a general principle. The position of the Community Institutions is very different in this respect.
[201] This is the term employed in Vlaamse, supra note 31 and was adopted by Advocate General Darmon in Pharmaceutical Society, supra note 30.
[202] See the discussion in the text accompanying note 112.
[203] This view is taken by at least two commentators in their discussions of intellectual property: Jacobs (supra note 38 at 646) stated that "the proviso at the end of Article 36 applies not only to measures taken by member States, but also to the exercise of industrial and commercial property rights". In other words, he felt that article 36(2) provided the source of an obligation imposed upon private parties, at least in relation to intellectual property. This summary emphasizes an important difference between that view and the one presented in this paper as regards the scope of accountability. Though article 36(2) shoud be adopted as the basis of accountability this need not entail holding private parties directly accountable in those situations previously categorised as 'exercises' of intellectual property rights. See also Beier, Industrial Property and the Free Movement of Goods in the Internal European Market, 21 I.I.C. 131, esp.149-150 who regards article 36(2) as the source of limitations upon the use of intellectual property rights and seems to apply it to private parties directly.
A position much closer to that taken here is suggested by Röttger, supra note 153, at p. 324. He notes, after citing the passage from Terrapin relied upon above, that "[a]fter this definitive statement there could no longer be any doubt that in the opinion of the Court the ban on arbitrary discrimination and disguised restriction on trade applied directly to the proprietor of industrial property".
[204] Both cited supra note 36.
[205] See for example, OLIVER supra note 1 at 167.
[206] Since without the breach of article 30-34 there is no reason for the measure to appeal to article 36(1), which provides grounds to justify those measures violating, for example, article 30. Hence a measure that is vindicated under the mandatory requirements test will not reach article 36, either sentence.
[207] Case 34/79 [1979] E.C.R. 1999.
[208] Id. at recital 21. (Emphasis added).
[209] See also Case 40/82 Commission v United Kingdom [1982] E.C.R. 2793; Deutsche Renault v Audi [1993] I E.C.R. 6227
[210] For example, in Case 178/84 Commission v Germany ("Beer Purity")at recitals 38-54 , the Court reasoned as follows. The measure 'violated' the principle of proportionality underlying artcle 36(2). Thus it failed to meet the criteria in article 36 for exception and hence Germany had failed to fulfil its obligations under article 30. The central violation in issue was located in article 30. Even so, there is some ambiguity implicit in the suggestion that article 36(2) was also 'violated' in some way.
[211] The alternative position is that a State measure violates article 36(2) whilst not violating article 30 by reason of the (then) unqualified exception in article 36(1). The difficulty with this position is only that it is strange to think of such a measure being in any sense 'justified' at the same time as violating an associated rule.
[212] Thus a purely private measure can only breach article 36(2) whereas a State measure (or private action in exercise of a public function) could violate both provisions. Even here, this repetition can be useful since more intrusive remedies might be attached to the more extreme case through article 36(2) alone.
[213] Case 251/78 Denkavit Futtermittel v Minister of Agriculture [1979] E.C.R. 3369.
[215] The same mechanics must apply to any interpretation of the law by the administrator. Support for this view is found in the discussion of judicial action, see text accompanying note 227 et seq.
[216] In other words a distinction must be made between law making and implementation.
[217] Case 27/80 Criminal Proceedings against Anton Adriaan Fietje [1982] E.C.R. 3839.
[220] Moreover, consider the exercise of discretion under national legislation justified by a combination of public health and consumer protection, or any combination such that one mandatory requirement and one ground in article 36(1) are relied upon. Would the exercise be subject to article 36(2) only to the extent of the article 36(1) justification whilst also being seen as an individual measure to be justified independently under the mandatory requirements?
[222] Supra note 29. In this case the Court excepted from the normal rules under article 30, 'selling arrangements' which affect domestic and imported goods in the same manner in law and in fact.
[223] In some states national administrative law may provide a similar protection, by constraining the exercise of discretion to the purposes of the statute.
[224] Supra, note 29 at recital 16. (Emphasis added).
[225] Keck, supra note 29, at recital 14.
[226] The difficulty in explaining this argument is the need, for reasons of space, to avoid digressing further into the boundary between selling arrangements and rules relating to requirements for goods. The manner in which this distinction is drawn has a large impact upon the debate in the text.
[227] Case 434/85 [1988] E.C.R. 1275, recital 25. See also Dansk Supermarked, supra note 35, at recital 12. In both cases the Court seemed to apply the provisions of articles 30-36 to the use of injunctions by national courts.
[228] Supra, note 227 at recital 25.
[230] It is harder, but still possible, to interpret Dansk Supermarked in this way since it makes no direct reference to article 36(2) and seems to suggest that article 30 to 36 apply as a whole to the national courts. This is echoed in some general statements that appear in Allen & Hanburys. This view must be refined in order to avoid the excessive implications discussed above. This is reflected in the number of commentators who confine the doctrine to judicial rule-making., supra note 45.
[232] Iht v Ideal-Standard, supra note 44.
[234] Case 62/79 [1980] E.C.R. 881.
[235] Marenco and Banks, supra note 42, at 229.
[236] See Phil Collins, supra note 196, where Attorney General Jacobs develops this theme primarily in relation to article 7 EEC..
[238] Supra note 209. Similarly Case 50/85 Schloh v Auto Contrôle Technique [1986] E.C.R. 1855, recital 15. See also Case 53/87 Circa v Renault [1988] E.C.R. 6039 where, at recital 12, the Court looks to a variety of factors to determine whether the national legislation was "intended to favour national products at the expense of products originating in other Member States".
[239] Indeed this will still be the case for rule makers. In this context the division is less concerning since, by analogy to State action, one might imagine a weaker standard for exports.
[240] For example Vlaamse, supra note 31, and Van de Haar, supra note 32. See the discussion in section A.
[241] Both cases cited supra note 36.
[242] In relation to the competition rules, the Commission has an assortment of powers, including the power to impose fines: Article 89 and in detail Regulation 17 (13/204 OJ 1959-62).
[243] The conclusion that the Commission cannot challenge "buy national" campaigns of private origin seems likely to remain correct: see Commission views cited supra, note 148.
[244] It is simply a question of interpretation of articles 169 and 170. The awkward relation between the identity of the 'Member State' and the actor involved is manifest even in standard cases such as violations by local authorities or the national legislature: see T. HARTLEY, THE FOUNDATIONS OF EUROPEAN COMMUNITY LAW 308 (3d ed. 1994).
[246] In Case 128/92 H.J. Banks & Co. v British Coal Corporation. The Advocate General was discussing the right to damages for breach of article 85, a matter which is still undecided.
[247] Case 45/76 Comet v Produktschap voor Siergewassen [1976] E.C.R. 2043 at recital 13.
[248] See Comet, supra note 253 and Case 33/76 Rewe v Landwirtschaftskammer [1976] E.C.R. 1989.
[249] Case 106/77 Amministrazione delle Finanze dello Stato v Simmenthal SpA [1978] E.C.R. 629.
[250] The effectiveness principle addresses the national court even in this context, the issue being its enforcement of breaches by private parties. In relation to breach of Treaty provisions see Walrave and Defrenne, supra note 5. Also Case 79/83 Dorit Harz v Deutsche Tradax [1984] E.C.R. 1921 concerning duties derived from implementation of a Directive.
[251] More precisely, the requirement of effective remedies is implicated by direct effect, itself a manifestation of supremacy: see Oliver, Enforcing Community Rights in the English Courts, 1987 M.L.R. 881, 882. A clear basis for the doctrine can be found in Van Gend en Loos, supra note 49.
[252] A similar point is made by Huglo, The Liability of the State for Breaching Its Obligations under Community Law: the Francovich Judgment of 19 November 1991, in CURRENT TRENDS AND DEVELOPMENTS IN THE CASE-LAW OF THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES: ANNUAL REVIEW, VOLUME 1 (ed. S. Pappas) at p. 78.
[253] Cases 6 and 9/90 Francovich v Italian State.
[254] Steiner, From direct effects to Fracovich: shifting means of enforcement of Community Law, (1993) 18 E.L.Rev. 3, 9.
[255] The Member State was obligated to enact certain principal rights and had failed to do so. Community law would wish to encourage the enactment of these principal rights. Hence the Court provided a remedy to create the necessary incentive for the Member State. As a consequence the Court needed to establish a right to bring an action: a secondary right for those who suffered by the State's breach. These are the individuals who would obtain the principal rights after enactment.
[256] One important complication is that the Court seems to State a general principle and then qualify this by reference to conditions, perhaps indicating disagreement within the Court: Duffy, Damages against the State: a new remedy for failure to implement Community obligations, (1992) 17 E.L.Rev. 133, 135.
[257] This is noted by Maitland-Walker, A Step Closer to a Definitive Ruling on a Right to Damages for Breach of the EC Competition Rules, [1992] 1 E.C.L.R. 3, 4. See also Advocate General Van Gerven, supra note 252.
[258] It is also useful to parallel this position with article 86. If one who abused a dominant market position faced no sanction, but merely knew that they would be unable to enforce the abusive scheme, then the incidence of abuse would be much greater. The sanction in this instance is often a fine, a possibility not available in relation to articles 30-36.
[259] Case 14/83 Von Colson and Kamann v Land Nordrhein-Westfalen [1984] E.C.R. 1891, and Harz v Deutsche Tradax, supra note 256.
[260] In the trade mark case there is the further factor that parallel imports will be allowed where they could otherwise have been banned. Smith, The Unresolved Tension between Trademark Protection and Free Movement of Goods in the European Community, (1992-3) 3 Duke Journal of Comparative and International Law 89, 116 argues that this provides an incentive for organisations not to adopt these schemes. However, there is a substantial cost involved in parallel importing when the mark or packaging must be altered. This will ensure that the parallel imports remain less competitive, and that it is still rational to set up such a scheme.
[261] Several objections can be made in relation to the application of a damages remedy to the Member State for its violation of article 30, for example the indeterminacy of the extent of liability and the absence of fault in many cases: Steiner, How to Make the Action Suit the Case, (1987) 12 E.L.Rev. 102, 109. Hence this remedy should not be applied to Member States without further consideration, which must take account of the extent of the Francovich doctrine.
Moreover, one can apply the same logic to private bodies performing public functions where the standard of review should be stricter. In these cases 'public law' forms of remedy may be more suited. Furthermore, the restraint of future breaches or the reconsideration of earlier mistakes may be regarded as sufficiently effective in this context. Even so, one might contemplate holding even these bodies to damages when they violate article 36(2). In formal terms one can say that damages should be seen as the only effective remedy for breach of article 36(2), whilst the national court retains greater flexibility in relation to breaches of article 30, whether by public or private bodies (the latter exercising public functions). Even though performing a public function, and potentially within the scope of an article 169 action, these bodies should be required to pay any damages themselves. The public element does not suffice to transfer this burden to the State in a more general sense (Temple Lang, New Legal Effects Resulting from the Failure of Member States to fulfil obligations under European Community Law: The Francovich Judgement, (1992-93) 16 Fordham Int'l L. J. 1, 36 discusses a similar concern in relation to elements of the State that may be liable under the Francovich principle.).
[262] Directive 76/207/EEC. Additional provisions which butress the effectiveness doctrine are article 189(3) of the Treaty, and article 6 of the Directive. These reinforce but do not appear to materially alter the operation of that doctrine. Hence the cases can be regarded as authorities in determining what is 'effective' to protect Treaty rights and obligations.
[263] Supra, note 265, at recital 14
[265] Case 271/91 Marshall v Southampton and South West AHA (Marshall II) [1993] I E.C.R. 4367, at recital 24.
[267] Id. at recital 18. In this recital the Court seems to suggest that in some circumstances there will be no discretion as to the type of remedy.
[268] Case 91/92 Paola Faccini Dori and Recreb.
[269] Smith, The Francovich Case: State Liability and the Individual's Right to Damages, [1992] 3 E.C.L.R. 129, 132.
[270] Ross, Beyond Francovich, 1993 M.L.R. 55, 61 notes that in relation to directly effective provisions (he focuses on rights) the case guarantees a remedy in damages when certain conditions are met.
[271] Advocate General Mischo in Francovich, supra note 259, expresses this point very clearly at recital 42 of his opinion: "... if the payment of compensation is the sole means in the particular circumstances of ensuring effective protection, the member State is under an obligation by virtue of Community law to make available to individuals an appropriate remedy enabling them to claim compensation."
[272] For example one can either maintain that articles 30-36 introduce a new cause of action in every system, or that each system should incorporate the required remedy into some existing framework. For the former view in relation to article 86, see Friend and Shaw, Damages for Abuse of Dominant Position, 1984 L.Q.R. 188, 190. See generally, BREARLEY AND HOSKINS, REMEDIES IN EC LAW Chapter 6 (1994).
[273] The impact will be felt primarily by those further down the chain of distribution and it might be thought that these parties also have a claim. However, their interest will be vindicated by the manufacturer. This element of distance may help to limit the role of frivolous claims.
[274] In one sense everybody is a potential parallel importer. However by demanding an actual loss this theory isolates a manageable group.
[275] An argument can also be made in favor of the owner of goods affected by discrimination in the provision of services. Clearly such a party will have a clear incentive to sue. Moreover the relation back to manufacturers will be weak in many such cases and may result in few suits. However, it may be thought that the result of allowing owners to bring suit would be to focus attention upon ad hoc rather than systematic discrimination, and generally raise the level of vexatious suits. Moreover the interrelation between the claims of owners and manufacturers would be hard to determine. For these reasons I focus here upon the manufacturer, whilst recognising the limitations of this approach.
[276] This sounds like lost profits, but should not be confused with this measure. Rather the loss is the actual loss of being deprived of competition: the loss of a chance.
[277] Supra note 36. The conventional interpretation regards this case as a convoluted application of the principle that only the national law is challenged in intellectual property cases. This interpretation is assumed for this section, though it has been suggested that the case is authority for the proposition that artcle 36(2) addresses private parties directly. The case at least demonstrates the concerns supporting private accountability.
[278] If so the position would resemble that envisaged by American Home Products with the addition of a damages remedy. As noted below, the availability of damages would make it necessary to reconsider the question of banning parallel imports.
[279] In terms of authority one can argue that Hoffman-La Roche, supra note 150, should be seen as the main stream authority on State measures in this sphere. As such it would apply to the scenario dealt with in American Home Products and would override the special approach suggested there. At the same time, American Home Products would be the seen as reflecting a concern for private accountability that was imperfectly addressed there. This concern would be concretized in the private accountability rule.
[280] See discussion in note 153. The conditions in Hoffman and Pfizer (both supra note 150)are fairly easily manipulated by undertakings. For example medicene producers can adopt packages which ensure that any repackaging would threaten the original condition of the products (noted by Handoll, Case Comment Pfizer Inc. v Eurim-Pharm GmbH, Repackaging of Drugs in Transparent Holders [1982] E.I.P.R. 83, 84).
[281] Such a case has not been considered by the Court. The point of this example is not to suggest a particular solution but to suggest how private accountability can improve Community law's ability to deal appropriately with such questions.
[282] This supposes that this extension is not a logical corollary of the present position. However, whilst the notion of 'reliance' may apply outside the sphere of intellectual property, it is certainly not this broad. There is a fundamental logical break between a right conferred by national law and a pure freedom undisturbed by national law (though it would take a jurisprudential essay to develop this). Even thought the actor relies, in some sense, upon the fact that national law does not restrict his freedom, this is a materially distinct shade of reliance. Unlike the right, the freedom cannot be relied upon in Court either as the basis of a claim against another, or as a defense to a suit. Reliance here simply means tolerance.
[283] See the discussion in GORMLEY, supra note 47, at 258.
[284] OJ 1983 C323/14 in response to a question concerning French disruption of pork imports.
[285] In particular there might be particular situations in which such a principle can usefully supplement private accountability in the form suggested here. To develop this supplementary role would demand a further extensive paper. One appropriate situation for discussion, where the Commission has suggested that the Member State may be responsible, concerns the actions of private parties to physically obstruct imports: see OJ 1983 C323/14.
[286] Daniele ** 1984 R.M.C. at 478; Quinn and MacGowan, supra note 20, at 167-170; Marenco supra note 35.
[287] See the authorities in note 84, supra.
[288] The inability of the Commission to exempt private actions from article 30 is noted as one argument against private accountability by Quinn and MacGowan, supra note 20, at p. 168-169.
[289] Regulation 1983/83, OJ 1983 L173/1, a block exemption for all exclusive distribution agreements fulfilling certain criteria.
[290] Id. articles 3(c) and (d). The Commission generally appears to regard the maintenance of the possibility of passive sales outside the distribution territory as essential to any form of exception under article 85(3). See BELLAMY AND CHILD, supra note 84, at ¶3023.
[291] Commission Decision Gosme/Martell-DMP OJ 1991 L185/23 provides a clear example. Collusion designed to prevent the growth of parallel imports was condemned. See furtherr, Case 25-6/84 Ford v Commission (No. 2) [1985] E.C.R. 2725. Here the Court upheld the Commission's Decision, OJ 1983 L327/31, in which the Commission had refused exemption on the basis that Ford had attempted to restrict the parallel importation of right hand drive cars into the U.K. by ceasing to distribute them in other Member States. This conduct was not directly related to the distribution agreement in question, yet was regarded as a sufficient threat to the common market to warrant refusal of exemption in this related agreement (see esp. paragraph 41).
[292] Some support can be derived from Ford (No. 2), supra note 291. It could also be argued that discrimination on grounds of national origin always threatens the common market ideal and must be considered in the decision whether to exempt any related arrangement.
[293] Case 5/69 [1969] E.C.R. 295.
[294] Notice on Agreements of Minor Importance, OJ 1986 C231/2.
[295] The absence of a de minimis rule in relation to State action does not preclude the development of such a principle for private action if it was thought desirable: the existence or not of the principle is a facet of the rules internal to articles 30-36 and is therefore capable of varying according to the circumstances. Barents, supra note 50, argues that all State actions are by their nature significant and thus the de minimis rule does not apply. A similar argument can be made in relation to private conduct which is suspect under the principles developed in this paper.
[296] See the Commission's Notice, supra note 294, at paragraph 1.
[300] In particular it can be said that the Commission should have a role in enforcement of the new rules, as it does with competition law. One reason for this would be the coordination problem amongst potential plaintiffs.
[301] This might be interpreted also as a view that article 30 did not extend this far, and that a Treaty amendment was not favored.
[302] The anti-integrationist effects of such measures are much greater at this stage of integration: Wils, supra note 57.