Samenvatting: Law of the Internal Market
OM ALLES UITGEBREIDER TE ZIEN (ALS DAT NODIG IS) => SV RUBEN
HC1: Internal Market & Free Movement of Goods:
Financial Restrictions
Internal Market
Art. 26 §2 TFEU
“The internal market shall comprise an area without internal frontiers in which the free movement of goods,
persons, services, and capital is ensure in accordance with the provisions of the Treaties.”
See also Articles 2 (values of the EU) and 3(3) TEU (creation of the internal market)
Link with other EU policies (also important but not imbedded in art. 26 §2 TFEU):
Competition law
State aid
Economic and Monetary policy (not part of this course)
Meaning
• THEN: The internal market and its establishment = primary economic rational of the EU (EU was founded on
the idea of cooperation and market integration to combat warmongering between France and Germany)
• NOW: Not only economic integration anymore also other things!! (see Article 3(3) TEU)
• Other terms are sometimes used: common market, single market, et cetera
Raison d’être (reason of existence)
• Instrument to meet overarching aims of EU
ovalues from Article 2 TEU
• Liberal economic view of market integration more integration is better for “the people”:
oless war between integrated states
olower consumer prices
ohighly competitive market with outside world
How does it function?
• Should work like a domestic market (common state) (Schul-case)
• Created through:
oNegative integration (no more barriers) => in course unit LIM we FOCUS ON THIS
oPositive integration (coordination and harmonization policies)
What constitutes a “barrier?
Barriers can result from:
1. Discrimination on the basis of nationality (dual burden in law) : direct discrimination
oDistinctly applicable rules
oWe use it mostly for free movement of persons, BUT because distinctly applicable => also applicable for
freedom of goods
oCAN NEVER BE JUSTIFIED, EXCEPT FOR THE ARTICLES BELOW
2. Different effect of legislation (equal burden in law, different burden in fact => measure looks neutral but
disadvantages a certain person/good on the basis of a protected criterium): indirect discrimination
oIndistinctly applicable rules => no distinction when testing the conditions for freedom of goods (??)
oCan be justified
3. Non-discrimination (equal burden in law and fact)
oIndistinctly applicable rules => no distinction when testing the conditions for freedom of goods (??)
oCan be justified
oE.g. maximum amount of ppl who can start => non-discriminatory rule that limits market access
oWhy does EU care?: different EU members have different rules => may lead to problems
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,Direct Discrimination – Prohibited by the Treaties
• Prohibition/Justifications of Direct Discrimination:
oGoods: Articles 34/35 TFEU (pro.) & Article 36 TFEU (just.)
oWorkers: Article 45 TFEU (pro. and just.)
oEstablishment: Article 49 TFEU (pro.) & Articles 51/52 TFEU (just.)
oServices: Article 56 TFEU (pro.) and Article 61 TFEU (just.)
oCapital: Article 63 TFEU (pro.) and Article 65 TFEU (just.)
• Direct discrimination can only be justified by those articles (no new justification can be added)
oException: The main purpose can still not be to discriminate => in this case is it still prohibited
Indirect Discrimination – Prohibited by the CJEU
• Prohibition of indirect/non-discrimination and justifications
oGoods (Cassis de Dijon, 1979)
oServices (Säger, 1991)
oWorkers (Kraus, 1993; Bosman 1995)
oEstablishment (Gebhard, 1995)
oCapital (Svensson, 1995)
Free Movement of Goods
Definition of Goods
• Commission v Italy (Art Treasures): “all products which can be values in money and which are capable of
forming the subject of a commercial transaction
oExceptions: e.g.
Schindler: Lottery tickets
Jägersköld v Gustafsson: fishing license
Barriers to Free Movement of Goods
• EU wants to eliminate protectionist behavior of Member States protectionism in area of goods can take
several forms:
oCustoms Duties
oDomestic taxes which discriminate imported goods
oQuantitative restrictions on imports (Week 2)
oState aid to national industry (Week 7)
Financial Restrictions – Main Provisions
• Articles 28-30 TFEU: prohibition on customs duties and charges having equivalent effect (CEEs)
oDuties and charges applying when goods cross border
• Articles 110-113 TFEU: prohibition on discriminatory tax provisions/internal taxation
oDifferential taxes when goods are ‘in country’
Customs Duties/CEEs (art. 30 TFEU)
• Article 28(1) TFEU (foundational provision):
“The Union shall comprise a customs union which shall cover all trade in goods and which shall involve the prohibition
between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the
adoption of a common customs tariff in their relations with third countries.”
• Article 30 TFEU (prohibition):
“Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member
States. This prohibition shall also apply to customs duties of a fiscal nature.”
oHas direct effect, both vertically (Van Gend & Loos) and horizontally (Dubois)
• There shouldn’t be any custom duties anymore bcs no justification (infra)
The Customs Union
• Internal and External dimension:
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, oInternally: Article 28(2) TFEU: Articles 28-30 TFEU apply in regards to goods originating from Member
States, free circulation goods
oExternally: customs duties levied on goods from third countries coming into the EU (see TARIC database),
extension of customs union benefits to third countries (Bouhelier, EMI, Polydor)
The Prohibition on Customs Duties/CEEs
• Currently: no Customs Duties between Member States focus on CEEs, which are “customs duties in
disguise”
• CJEU looks at effect of the duty, not at their purpose:
oCommission v Italy (Art Treasures): IT argued that the charge was to protect art treasures, not raise
revenue; Court: “prohibits the collection (…) of any customs duty/CEE (…) that is to say, any charge
which, by altering the price of an article exported, has the same restrictive effect on the free circulation
of that article as a customs duty. This provision makes no distinction based on the purpose of the duties
and charges the abolition of which it requires”
oCommission v Italy (Statistical Levy):
“Consequently, any pecuniary charge, however small and whatever its designation and mode of
application, which is imposed unilaterally on domestic or foreign goods by reason of the fact that
they cross a frontier, and which is not a customs duty in the strict sense, constitutes a charge
having equivalent effect within the meaning of Articles 9, 12, 13 and 16 of the Treaty, even if it is
not imposed for the benefit of the State, is not discriminatory or protective in effect and if the
product on which the charge is imposed is not in competition with any domestic product”
=> No matter how small the charge and whether it benefits the state!
oSociaal Fonds voor Diamantarbeiders: No matter the purpose!
Customs Duties/CEEs: Justifications(?)
• Duties/CEEs caught by Article 30 TFEU are unlawful per se no justification possible
• Two narrow exceptions:
oService rendered to the importer (Commission v Belgium (warehousing), Commission v Italy (customs
offices and Bresciani))
oCharge levied to cover cost of mandatory EU health inspection (Commission v Germany (health
inspection)
• If charge is not justifiable: duty to reimburse (San Giorgio, Comateb)
Discriminatory Internal Taxation (Art. 120 TFEU)
• Starting Point: fiscal sovereignty of Member States, as long as it does not harm the internal market
(Humblot)
• Article 110 TFEU (has DIRECT EFFECT, Lüttick):
o“No Member State shall impose, directly or indirectly, on the products of other Member States any
internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.
(Similar Goods)
=> look case by case to see if there is a similar good in the same Member State
oPara 2: Furthermore, no Member State shall impose on the products of other Member States any internal
taxation of such a nature as to afford indirect protection to other products.” (Goods in Competition)
Discriminatory Internal Taxation – What & Why
• Definition of Internal Taxation:
“A charge is an internal tax…if it relates to a general system of internal dues applied systematically to
categories of products in accordance with objective criteria irrespective of the origin of the products” (Co-
Frutta)
• Aim of Article 110 TFEU: prevents Articles 28-30 TFEU from being undermined by internal taxation
neutrality of internal taxation
When is Internal Taxation Discriminatory?
1. Is there a reason for the distinction in taxation unrelated to origin? (Bergandi (gambling machines) (C-
252/86), Commission v France (natural sweet wine) (C-196/85), Chemial Farmaceutici SpA (synthetic ethyl
alcohol) (C-140/79), Commission v Greece (cars) (C-132/88))
oyes: no violation of Article 110 TFEU
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, ono: Article 110 TFEU applies => STEP 2
2. Are the goods similar or in competition?
oSimilarity (Article 110(1) TFEU):
Broad test (John Walker) based on factual comparison of economic use
Direct discrimination (based on origin) or indirect discrimination? no justification if direct,
indirect can be justified
oIn competition (Article 110(2) TFEU):
Cross-elasticity test (Commission v UK (beer and wine))
When goods compete, protective effect must be taken away
OG1 Internal Market & Free Movement of Goods:
Financial Restrictions
Exercise customs duties/CEEs (artt. 28-30 TFEU)
Step 1: is it a good?
• Commission v Italy (Art Treasures): “all products which can be values in money and which are capable of
forming the subject of a commercial transaction
oExceptions: supra
Step 2: is there a cross-border element?
• External borders
• BUT ALSO internal borders: Custom duties are even prohibited when they are applied within a Member
State and are imposed on goods that enter or leave a particular region of that state (René Lancry, Carbonati
Apuani).
Step 3: Is there a financial restriction => is it a customs duty/CEE?
• EITHER customs duty/duties OR charge(s) having equivalent effect (CEE(s)) (definition: supra)
• Application of article 30 TFEU depends upon the effect of the duty, and not on its purpose (Sociaal Fonds
voor Diamantarbeiders)
=> Duties/CEEs caught by Article 30 TFEU are unlawful per se no justification possible
Step 4: is there an exception?
oService rendered to the importer (Commission v Belgium (warehousing), Commission v Italy (customs
offices) and Bresciani) => BUT HAVE TO CONVINCE THE COURT AS CJEU IS RELUCTANT TO ACCEPT THIS
(did not work in Statistical Levy, …)
Specific and direct benefit actually conferment
Payment in proportion to the service
Inspections in the general interest are not a service rendered to importer
oCharge levied to cover cost of mandatory EU health inspection (Commission v Germany (health
inspection)
Not exceed the actual costs of the inspections
Inspections must be obligatory and uniform
In the general interest of the Union
Inspection must promote the free movement of goods
Step 5: Possible action + reimbursement
• Because article 30 TFEU has direct effect (vertical: Van Gend & Loos, horizontal: Dubois), the provision can
be relied upon in a national court
• If charges have been levied, they are to be reimbursed, unless this would lead to unjust enrichment of the
trader (San Giorgio, Comateb)
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