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Case analysis of Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein (Cassis de Dijon judgment)




Author:

Anjana Gopinath

Final year student, B.A.LL.B,

Symbiosis Law school, Pune



Case number: C-120/78, EU:C:1979:42, [1979] ECR 649.

Date of decision: Feb. 20, 1979.


Judicial Body: Court of Justice of the European Communities.


The Cassis de Dijon Judgement is a landmark judgement on the concept of free movement of goods. In this case, it was held by the Court that a rule which applies to both imported and to domestic goods, that produces an effect equivalent to a quantitative restriction is an unlawful restriction on the free movement of goods.


Facts of the case:


Rewe-Zentral AG, a company and Plaintiff in the present case, had requested a German Administration for spirits, Bundesmonopolverwaltung für Branntwein, for authorisation for importing a liquor known as ‘Cassis de Dijon’ from France to the market in Germany. The liquor contained 15 to 20% of alcohol content. The Administration informed the company that they did not require an authorisation, and also proceeded to advise them that the liquor would not be marketable in Germany, a national rule mandated a minimum of 25% alcohol content in liquor, and thus the sale of Cassis de Dijon would be prohibited. The Plaintiff company challenged this rule of the German Law before the German National Courts on the ground that it violated Article 30 and 37 of the EEC Treaty by acting as a restriction to free movement of goods. The national Court then referred the case to the European Court of Justice to decide on the interpretation of Article 30 and 37 of the EEC treaty.


Issues:


The issues of the present case are the following:


1) Whether the concept of measures having an effect equivalent to quantitative restrictions on imports contained in Article 30 of the EEC Treaty is to be understood as the fixing of a minimum wine-spirit content for potable spirits laid down in the German Branntweinmonopolgesetz, the result of which is that traditional products of other Member States whose wine-spirit content is below the fixed limit cannot be put into circulation in the Federal Republic of Germany, also comes within this concept?


2) Whether the fixing of such a minimum wine-spirit content come within the concept of “discrimination regarding the conditions under which goods are procured and marketed between nationals of Member States” contained in Article 37 of the EEC Treaty?

These issues in the present case were technically the questions put forward by the National Court to the ECJ while referring the case to the latter.


Rules:


1) Article 30 of the EEC Treaty:

Article 30 of the EEC Treaty prohibits quantitative restrictions on importations as well as measures which have an equivalent effect.


2) Article 37 of the EEC Treaty:


Article 37 of the EEC Treaty expressly states a mandate of non-discrimination with respect to state trading. While it does not absolutely prohibit state trading, it requires the progressive adjustment of State monopolies to eliminate and abstain from discriminatory practices against the products of other Member States.


Analysis:


The Cassis de Dijon is a case which is considered to be a landmark decision in regards to the free movement of goods. It laid down the principle of Mutual Recognition. The Court, through this case, held that a product which is lawfully sold in one Member State could not be prohibited in another Member State.


The ruling of the ECJ in the present case with the issues in question was as follows:


In regards to the first issue, it was observed by the Court that there was no Act or regulation which covered the matter of production and marketing of alcohol, and for the same reason, the State can decide on the matter within the scope of their territory. It was observed that the disparities between National legislations are acceptable when the aim is to achieve mandates like protection of public health, consumer protection, the fairness of commercial transactions and the effectiveness of economic supervision[1]. Even though the German Government claimed that the minimum quantity of alcohol content was to protect consumers from goods of bad quality, the Court observed that setting such minimum content amounted to a violation of Article 30 of EEC Treaty, as it created an obstacle to trade. It was pointed out by the Court that such a measure was equivalent to quantitative restrictions upon imports, which is prohibited under the article. Thus, if the justification is not reason enough to be not considered a restraint upon trade, the country’s measures is prohibited.


With respect to the second issue as to whether the fixing of certain minimum alcohol content in liquor amounted to discrimination which is to be eliminated under Article 37 of the EEC Treaty, it was held by the Court that the present facts of the case do not amount to such discrimination, as Article 37 relates to explicitly to State monopolies of a commercial character. In the present case, the same rule was applied equally to national as well as foreign products and did not constitute exercise by a public monopoly for a specific function[2]. The Court, while answering this issue, had rightly pointed out the inapplicability of the article as the subject matter concerned was different.


In the present case, the European Court of Justice developed a merging method, which provided a new way of reconciling national differences and making them in accordance with the E.U. law. This was done by way of developing a principle of mutual recognition. Through this method, the French minimum standard in respect of alcohol content (15-20%) was to be accepted as equivalent to the German Standard of 25%. But the difference in the standards maintained in regards to products must have reasoning attached to it, and these justifications can be only specific mandatory requirements to be followed. These specific grounds are to ensure fiscal supervision, the protection of public health, the fairness of commercial transactions and consumer protection. Thus, the Court by way of the Principle of Mutual Recognition, ruled that a product which is legal in one country in the E.U. are also legal in the markets of other E.U. member Countries.


This decision has become a landmark decision in the area of free movement of goods, as it gave a clear idea on the difficulty that courts might face with respect to answering potential challenges raised against national laws. The earlier decision in the case of Procureur du Roi v Benoît and Gustave Dassonville[3] had laid down that trading rules in Member Countries which placed any direct or indirect obstacle on trade within the E.U. are regarded as measures which are equivalent to quantitative restrictions. However, this posed a difficulty, as traders may end up challenging any law that might be of minor inconvenience too, by pointing it out as a hindrance to trade. This situation might result in a large series of cases challenging a great number of national legislations. In such a situation, the ruling in Cassis de Dijon is a vital decision which lays down a criterion within which the facts need to be assessed. While it aims at the achievement of free movement of goods, it also maintains a boundary as to the flexibility of laws that can be maintained by Member Countries with respect to trade laws. While the former served the interests of E.U. trade, the latter recognises national trade interests.


It is also important to note that the Court’s Principle of Mutual Recognition was also recognised and adopted by the E.U. Institutions, upon the realisation that detailed harmonisation was nearly impossible and that the only hope towards more integration was through mutual recognition[4]. The Commission had adopted the principle as its chief strategy for achieving the internal market.[5]Thus, it can be said that the decision has also facilitated in reshaping the way the E.U. Institutions seek to move forward in regards to the closer integration of the Union.


Conclusion:


In conclusion, it can be stated that the case provided a strong legal ground in the enforcement of free movement and goods in the European Union. At the same time, it also recognised the reasonable steps taken by Nations with respect to trade and was also cautious about laying down the scope of the same. Even though the principle of mutual recognition has been glorified and has been recognised by E.U. institutions, the future application of the same might also differ with respect to change in the circumstances or with new aspects in regards to trade. The difficulty in assuring the free movement of goods is never an easy mission, and for the same reasons, the principle needs to be analysed in the long run.


Nevertheless, the case acquires a significant role in acting as a tool for reducing the number of potential cases as well as for analysing future cases of similar circumstances.

References:


Case laws:

1) Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein, C-120/78, EU:C:1979:42, [1979] ECR 649.

2) Procureur du Roi v Benoît and Gustave Dassonville, (1974) Case 8/74.


Articles/Reports:

1) Nora Gevorgyan, The Role, Impact and Development of The Principle of Mutual Recognition in E.U. Law, http://ysu.am/files/08N_Gevorgyan_e.pdf.

2) White Paper, Completing the Internal Market, Jun. 13, 1985 (COM (85)314).


International Treaties:

The Treaty of Rome (Mar.25, 1957),https://ec.europa.eu/romania/sites/romania/files/tratatul_de_la_roma.pdf [1] Para 8, ECLI:EU:C:1979:42 Judgement, http://curia.europa.eu/juris/showPdf.jsf?text=&docid=90055&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=8799566. [2] ECLI:EU:C:1979:42 Judgment (Summary), http://curia.europa.eu/juris/showPdf.jsf?text=&docid=90038&pageIndex=0&doclang=en&mode=req&dir=&occ=first&part=1&cid=8799566. [3] (1974) Case 8/74. [4] Nora Gevorgyan, The Role, Impact and Development of The Principle of Mutual Recognition in EU Law, http://ysu.am/files/08N_Gevorgyan_e.pdf. [5] White Paper, Completing the Internal Market, Jun. 13, 1985 (COM(85)314).

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