Legal issue: Whether a prohibition against resale of goods at a lower price is compatible with Community law, given that the sale of such good at a loss by manufacturer himself was not prohibited?

Background of the case: The case involved two managers of supermarkets who were prosecuted in France for selling 1.264 bottles of “Picon” beer and 544 kilograms of “Sati Rouge” coffee at prices below those at which they had purchased them. Resale at a loss was prohibited under French law, but on the other hand the law in question did not ban sale at a loss by manufacturers. The case was referred to ECJ by the competent French court.

The decision: Because of the increasing tendency of traders to invoke Article 28 of the EC Treaty, as interpreted in Dassonville and Cassis de Dijon cases, in order to challenge rules which were not aimed at products from other Member states, the ECJ found it necessary to re-examine and clarify its case law on the matter. In the view of the ECJ, the purpose of the French legislation in question was not to regulate trade in goods between Member States. The fact that undertakings selling in different Member States are subject to different legislative provisions, some prohibiting and some permitting resale at a loss, does not constitute discrimination for the purposes of Article 7 of the EEC Treaty (principle of non-discrimination). The ECJ said that although such a legislation might restrict the volume of sales, and hence the sale of products from other Member States, it was still a question if such a possibility was sufficient to characterize this legislation as a measure having an effect equivalent to a quantitative restriction on imports. The application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements is not such as to hinder directly or indirectly, actually or potentially, trade between Member States within the meaning of the Dassonville judgment, so long as those provisions apply to all relevant traders operating within the national territory and so long as they affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States.

Significance and implications: The judgment in Keck tries to restrict the broad interpretation of Article 28 of the EEC Treaty (Article 30 at the time) given in Dassonville and Cassis de Dijon cases. The ECJ was clearly trying to draw narrower limits to Article 28 to make its application easier. It distinguished between rules which relate to the goods themselves in terms of their composition, packaging, or presentation which would still fall within the scope of Article 28, and the rules relative to selling arrangements which were thought to be outside the scope of that Article, even though they might affect the total amount of goods sold, if they might qualify as a selling arrangement. However, the concept of ‘selling arrangement’ was not clear enough, and its application gave much difficulty in future cases.