Legal Updates

Commercial Law – Free Movement of Goods – Pre-Packaging of Goods - Manufacture – EC Law – Prohibition on Marketing Pre-Packaged Goods

The recent case of Schutzverband der Spirituosen-Industrie eV v Diageo Deutschland GmbH (Case C-457/05) [2007] concerned issues relating to the free movement of goods in the European Community. Article 5 of Council Directive (EEC) 75/106 (on the approximation of the laws of the Member States relating to the making-up by volume of certain pre-packaged liquids), as amended, so far as material, provides as follows:

The applicant in this case was an incorporated association whose purpose was to monitor and ensure compliance with the legislation in force applicable to businesses in the German spirits sector. The respondent was a German subsidiary of a drink manufacturer incorporated in the United States of America.

In Germany the respondent marketed, amongst other things, beer, whisky, gin and vodka under a variety of brand names. Since October 2004, the respondent had marketed the beverage 'Baileys' in Germany in pre-packages with a nominal value of 0.071 litres, called 'Baileys Minis'. This product was manufactured and bottled in Ireland.

‘… (1) Member States may not refuse, prohibit or restrict the placing on the market of pre-packages which satisfy the requirements of this Directive on grounds related to the determination of their volumes, the methods by which they have been checked or the nominal volumes where these are set out in Annex III, column I …

... (3)(b) Pre-packages containing the products listed in Annex III, section 1(a) and (b) may only be marketed after 31 December 1988 if they have the nominal volumes set out in Annex III, column I ... Packages containing the products listed in Annex III 2(a) may be marketed after 31 December 1990 only if they have the nominal volumes set out in column I of that annex. Those pre-packages which appear in Annex III, section 4, may be marketed after 31 December 1991 only if they have the nominal volumes set out in the said column I …

... (d) Without prejudice to subparagraph (b), products listed in Annex III, section 4, and having the volume of 0.071 litres may be marketed in Ireland and the United Kingdom.’

A dispute arose between the parties as to whether the sale of the product in those pre-packages was permissible in Germany. The domestic court temporarily suspended the proceedings and referred the matter to the European Court of Justice for a preliminary ruling. The questions that fell to be determined were as follows:

‘… Whether the second sentence of the second subparagraph of art 5(3)(b), in conjunction with art 5(3)(d) and in conjunction with Annex III, section 4, of Council Directive (EEC) 75/106 (on the approximation of the laws of the member states relating to the making-up by volume of certain pre-packaged liquids), as amended, (the directive) fell to be construed as meaning that products in bottle packaging with a volume of 0.071 litres, which were lawfully manufactured and/or marketed in Great Britain or Ireland, could also be marketed in all the other EC member states’ and

‘… If not, whether the second sentence of the second subparagraph of art 5(3)(b), in conjunction with art 5(3)(d) and in conjunction with Annex III, section 4, of the directive was compatible with the principle of free movement of goods under arts 28 and 30 of the EC Treaty’.

The Court held that:

§                     On a proper construction of Article 5(3)(b) of the directive, pre-packages with a nominal volume of 0.071 litres which contained one of the products listed in section 4 of Annex III to that directive, and which were lawfully manufactured and marketed in Ireland or the United Kingdom, could also be marketed within the other EC member states. With regard to the pre-packages that were legally produced and marketed in at least those two member states, Article 28 of the EC Treaty precluded the prohibition of their marketing in other member states, unless such a prohibition was justified by an overriding requirement. That overriding requirement had to be applied without distinction to national and imported products alike, and was necessary in order to meet the requirement in question. It also had to be proportionate to the objective pursued, and it was necessary that that objective could not have been achieved by measures which were less restrictive of intra-Community trade.

§                     The court felt the final sentence of the second paragraph of Article 5(3)(b) of the directive, read in conjunction with Article 5(3)(d), was invalid in so far as it excluded the nominal volume of 0.071 litres from the harmonised Community range of nominal volumes appearing in column I of section 4 of Annex III to that directive.

§                     If a producer, established in a member state other than Ireland or the UK, wished to be able to market the packages, it would be obliged to export those packages to those two member states or to manufacture them there before re-importing to its own member state. The court believed that that prohibition on marketing could not be justified since it manifestly contradicted one of the objectives pursued by the directive itself, namely the free movement of packages containing liquids referred to by the directive.

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© RT COOPERS, 2007. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

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