Legal issue: Which regulatory requirements amount to ‘measures having an effect equivalent to quantitative restrictions’, which were prohibited by EEC Treaty?
Background of the case: The case was referred to ECJ by a Belgian court. А Belgian import regulation required that spirits imported and sold in Belgium had to be accompanied by an official document from the government of the country of origin certifying their authenticity. In this particular case a Scotch whiskey and, respectively, the UK government were concerned. Although this rule clearly aimed to protect Belgian consumers from fake whiskey, it effectively blocked importers from buying whiskey in France, where it was cheap and where no certificate of origin was required for ‘Scotch whisky’, and selling it in Belgium. In practice it was impossible to obtain the certificate required. Importers could still buy whiskey directly from the manufacturers in Scotland and obtain a certificate, but then they would have to pay a higher price for it. This regulation arose because the manufacturers sold at different prices to different countries, according to what the market could bear, and did not want f ‘parallel import’ (that is, reselling of goods from a market with a lower price in a market where the price was higher). In France they sold cheap because they were trying to break into the market.
Decision: The ECJ has shown no tolerance for rules that tend to divide the internal market into national units. The Belgian rule – requiring certificates of origin for Scotch Whiskey - entirely prevented exports from France to Belgium. The restriction meant that it was perfectly possible for a French seller of Scotch whisky to sell the whisky, but a short distance away, in Belgium, a trader selling the same whisky would be subject to restrictions that would effectively create a restriction on his ability to compete with the French trader. In its decision the ECJ referred to Article 28 of the EEC Treaty under which ‘quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States’. Accordingly, the ECJ declared the Belgian rule void considering it as a measure having an effect equivalent to a quantitative restriction. In so doing, the ECJ gave what has become a classic definition of measures having equivalent effect to quantitative restrictions (the so-called ‘Dassonville formula’):
‘All trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be considered as measures of having an effect equivalent to quantitative restrictions.’
Significance and implications: The Court’s holding in Dassonville could potentially affect a very broad range of restrictions, and therefore the ECJ has sought to limit the range of this decision, in cases such as Cassis de Dijon, which was decided a few years later.