Legal Risk Management in Electronic Commerce

The purpose of this chapter is to introduce the fundamental legal framework of the Internal Market, including, in particular, the principles of free movement of goods and services. These freedoms will to some extent restrict the states of the Internal Market ('Member States') from carrying out cross-border law enforcement against businesses established in another Member State. The country of origin principle of the 2000 E-Commerce Directive plays an important role in this discussion. There will be a discussion on the relationship between the country of origin principle and the mentioned freedoms.

The freedom of expression is also examined, since a restriction imposed on the Business may interfere with this freedom. The focus is on the 'commercial freedom of speech'. Human rights are part of the European Union legislation, but the 1950 Convention on Human Rights has also been ratified by a number of states which are not part of the European Union and may thus have a bearing on the possibilities for those states to impose sanctions.

This chapter serves as a reference for a number of topics discussed later in this thesis. This is true for discussions on public law enforcement, private law enforcement and geographical delimitation.

The primary international legal person is the state which comprises the state’s territory and the government and population within its borders.¹ Assuming that international law exists, sovereignty of states can be expressed in terms of law, providing that a state has 1) exclusive jurisdiction over a territory and its permanent population, 2) a duty of non-intervention in the exclusive jurisdiction of other states and 3) the dependence of obligations arising from customary law and treaties on the consent of the obligor.²

States are as a starting point sovereign to prescribe, adjudicate and enforce within their own territory.³ Jurisdiction is a central feature of sovereignty.⁴ The member states of the Internal Market ('Member States') have, however, agreed to limit their competence to restrict access to their markets by businesses established in other Member States. The sovereignty of states provides a state with legislative competence over its territory, and states are not obliged to consent to treaties and tribunals. Most states have for economical and/or political reasons acceded to international agreements.

A common market, the Internal Market, is established through the Treaty Establishing the European Community (‘the EC Treaty’). A fundamental principle is that the treaty, according to article 12, prohibits any discrimination on grounds of nationality.⁵ The EC Treaty furthermore establishes the concept of free movement of inter alia goods and services. It is in this context important to establish both what constitutes a restriction and to what extent such restrictions may be justified. In this part of the project, the 2000 E-Commerce Directive will also be examined in the light of these freedoms.

This chapter deals mainly with restrictions imposed on the Business by other states of the Internal Market. The Business may invoke these freedoms if an action against it is taken in another Member State. The aim is to define the Business's freedom to provide goods and services in other states. The Business cannot rely on the freedoms of the Internal Market against restrictions imposed from a state which is not a member of the Internal Market. But as demonstrated later in this thesis, traditional law enforcement requires cooperation with the state in which the Business is established, which is less likely to take place if actions are taken from a state which is not a Member State. The fundamental principles of the Internal Market as constructed by the European Court of Justice and the Court of the European Free Trade Association (the EFTA court), have proven to influence a broad variety of legal disciplines.

For this thesis the main treaties to be examined are those constituting the Internal Market, including legislation derived from those treaties. Treaties on private international law are being dealt with in chapter 4. The agreements entered under the World Trade Organisation may also be relevant to transnational trade and barriers hereto, but this area is excluded from the scope of this thesis. Human rights are a fundamental part of the Internal Market and the freedom of expression is discussed in order to establish how this fundamental right may be invoked by the Business against restrictions imposed from another Member State. The principles of human rights as acknowledged in the Internal Market may also serve as (public policy) objections towards cross-border law enforcement deriving from outside the Internal Market.

2.1. The European Union

The European Union⁶ was established by the Treaty of the European Union⁷ (TEU) signed in Maastricht in 1992.⁸ The European Union is founded on the European Communities and its task is to organise relations between the Member States and between their peoples in a consistent and solidary manner.⁹ TEU¹⁰ and the EC Treaty,¹¹ both amended by the 1997 Amsterdam Treaty¹² and the 2000 Treaty of Nice,¹³ constitutes the primary sources of European Union law.

There is an ongoing work on a European Constitution.¹⁴ The draft treaty establishing the constitution (EU Constitution) was adopted on 18 June 2004 and signed on 29 October 2004 by the 25 EU Member States and the three candidate states (Bulgaria, Romania and Turkey). The EU Constitution must, however, be adopted (ratified) by each of the signatory countries in accordance with their own constitutional procedures. When, and if, the EU Constitution is ratified by all the signatory States, the Treaty can enter into force and become effective, in principle, according to the Treaty, on 1 November 2006.¹⁵ The future for the constitution is highly uncertain, but if it is finally ratified, it will not substantially alter the conclusions in this thesis.

The European Union consists of the following 25 states: Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and United Kingdom.

The TEU and the EC Treaty have both elements of traditional international agreements and elements of a supranational nature. The latter means that decisions may derive their binding effect from powers given through treaties and not because every decision is agreed upon. The European Union law consists of three pillars which are the European Community (EC Treaty) and two intergovernmental pillars (TEU) consisting of 1) Common Foreign and Security Policy and 2) Police and Judicial Cooperation in Criminal Matters.

Because of the extensive cooperation between the members of the European Union, these states have to a large extent limited their sovereignty in favour of mutual rights and obligations in the European Union. The primary areas of interest for this thesis are the law deriving from the first pillar (title I on free movement of goods, title III concerning inter alia free movement services and the right of establishment and title IV dealing inter alia with judicial cooperation in civil matters) and the third pillar (title VI on police and judicial cooperation in criminal matters).

It should be noted that Denmark has a reservation concerning the judicial cooperation in civil matters, which means that none of the provisions of title IV of the TEU apply to Denmark.¹⁶ The UK has a similar reservation, but with a possibility to participate on a case by case basis.

2.2. The European Economic Area

The European Free Trade Association (EFTA)¹⁷ consists of Norway, Iceland, Switzerland and Liechtenstein. A number of Member States¹⁸ have left the association in favour of the European Union. The association is based on the 1960 Convention establishing the European Free Trade Association¹⁹ as amended by the 2001 Vaduz Convention.²⁰ This convention comprises inter alia rules on free movement of goods and services similar to those found in the EC Treaty.

Three of the EFTA states (Norway, Iceland and Liechtenstein) have in 1992 entered an agreement with the European Community and the member states of that time, establishing the European Economic Area (The EEA Agreement).²¹ The EEA Agreement includes the three non EU states in the Internal Market, without providing full membership of the EU. These three states have the right to be consulted by the Commission during the formulation of community legislation, but they have no say in the decision making. The EFTA Court²² interpret the EEA Agreement with regard to the EFTA states which have adhered to the agreement.

The EEA Agreement comprises four freedoms (freedom of movement of goods, freedom of movement of persons, of services and of capital) and some horizontal provisions relevant to these four freedoms (social policy, consumer protection, environment, company law and statistics). All new legislation under the EC Treaty within these areas is integrated into national legislation of the EEA EFTA States. The application of the Agreement is carried out through a joint committee whose main function is to take decisions extending Community Regulations and Directives to the EEA EFTA States. The EEA Agreement deals also as a main feature with conditions of competition and it allows for cooperation between the Community and the EEA EFTA States in a range of the Community's activities.

Switzerland is located in the middle of the EU, but is not part of neither the European Union nor the EEA. The Swiss people has so far rejected participation in both. Switzerland has, however, a number of agreements with the European Union, including the 1972 Free Trade Agreement,²³ which prohibits customs duties and quantity-related or equivalent restrictions (only) on industrial goods, excluding agricultural products. The special conditions concerning EU, the Internal Market and Switzerland are not further elaborated on in this thesis.²⁴ Other arrangements between EU and other states are also not elaborated on.

The term 'Internal Market' as used in this thesis covers both EU and EEA States, but the discussion will only be based on the EC Treaty. 'Member States' denotes states within the Internal Market.

2.3. Free Movement of Goods²⁵

Title I of the third part ('Community Policies') of the EC Treaty contains provisions on the free movement of goods. This part is divided into 'the Customs Union' and 'Prohibition of Quantitative Restrictions Between Member States'. Only the latter is subject to further examination in this thesis. It should be noted that article 25 of the EC Treaty provides that customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States.²⁶

Articles 28 and 29 of the EC Treaty provide that quantitative restrictions and all measures having equivalent effect shall be prohibited between Member States concerning both imports (article 28) and exports (article 29). According to article 30, these provisions do not preclude restrictions on grounds of 1) public morality, public policy or public security, 2) the protection of health and life of humans, animals or plants, 3) the protection of national treasures possessing artistic, historic or archaeological value or 4) the protection of industrial and commercial property. Such restrictions may, however, not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.

The provisions in articles 28 to 30 of the EC Treaty are directly applicable. This means that where provisions of national law are incompatible with these articles, the national courts and administrations are obliged to guarantee the full impact of Community law by removing, on their own initiative, the conflicting provisions of national law. The national court must if necessary refuse of its own motion to apply any conflicting provision of national legislation.²⁷ The question of direct applicability is further dealt with below.²⁸

2.3.1. Restrictions

The ban in article 28 of the EC Treaty concerns quantitative restrictions which comprises quotas and total bans on the import of goods into a Member State²⁹ and all measures having equivalent effect. 'Goods', as referred to in article 28 of the EC Treaty, are products which can be valued in money and which are capable, as such, of forming the subject of commercial transactions.³⁰ In the absence of harmonisation, obstacles to free movement of goods which are the consequence of applying, to goods coming from other Member States where they are lawfully manufactured and marketed, rules that lay down requirements to be met by such goods (such as those relating to designation, form, size, weight, composition, presentation, labelling, packaging),³¹ constitute measures of equivalent effect prohibited by article 28.

In the Dassonville case³² the European Court of Justice established that '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 having effect equivalent to quantitative restrictions'. It is clear from the Dassonville case that the court applies a broad concept of restrictions which is based on the effect rather than the intention. Leaving aside rules having merely hypothetical effect on intra-Community trade, it has been consistently held that article 28 of the EC Treaty does not make a distinction between measures which can be described as measures having equivalent effect to a quantitative restriction according to the magnitude of the effects they have on trade within the Community.³³ 'Measures' does not necessarily concern legally binding rules, but may also comprise practices and policies,³⁴ if the practice or policy show a certain degree of consistency and generality.³⁵

In the Buy Irish Case,³⁶ it was established that the implementation of a programme defined by the government of a Member State to encourage the purchase of domestic products was to be regarded as a measure having an effect equivalent to quantitative restrictions. The programme comprised inter alia a national advertising campaign and the introduction of a 'Guaranteed Irish' symbol. Even though the campaign had no significant success, the judgment was based on the mere fact that the activities formed part of a government programme which was designed to achieve the substitution of domestic products for imported products and was liable to affect the volume of trade between Member States.

This case also showed that the term 'enacted by Member States' also covers situations where the role of the government is restricted to moral support and financial assistance.³⁷ Below there is a discussion on how the freedoms apply to private entities' activities.³⁸

2.3.1.1. Certain Selling Arrangements

Legislation which restricts or prohibits certain forms of advertising and certain means of sales promotion may, although it does not directly affect imports, restrict the volume of sales because it affects marketing opportunities for the imported products. Such rules may compel a producer either to adopt advertising or sales promotion schemes which differ from one Member State to another or to discontinue a scheme which he considers to be particularly effective. Such legislation may constitute an obstacle to imports even if the legislation in question applies to domestic products and imported products without distinction.³⁹ This appear to be in accord with the Dassonville ruling, which also comprises measures which are 'indirectly capable of hindering intra-Community trade'.

In the Keck and Mithouard case,⁴⁰ two persons were being prosecuted for reselling products in an unaltered state at prices lower than their actual purchase price ('resale at a loss') which was contrary to French law. The European Court of Justice admitted that the legislation in question could restrict the volume of sales and hence the volume of sales of products from other Member States, in so far as it deprives traders of a method of sales promotion. But the court questioned whether such a possibility was sufficient to characterise the legislation in question as a measure having equivalent effect to a quantitative restriction on imports within the meaning of article 28.⁴¹ It was noted by the court that the prohibition was not designed to regulate trade in goods between Member States.⁴² Due to an increasing tendency to invoke article 28 as a means of challenging any rules whose effect is to limit their commercial freedom, the court wanted to re-examine and clarify its case law on this matter.⁴³

The court established, contrary to what had previously been decided, that national provisions restricting or prohibiting certain selling arrangements are not such as to hinder directly or indirectly, actually or potentially, trade between Member States within the meaning of the Dassonville judgment mentioned above, 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. Provided that those conditions are fulfilled, the application of such rules to the sale of products from another Member State meeting the requirements laid down by that State is not by nature such as to prevent their access to the market or to impede access any more than it impedes the access of domestic products. Such rules therefore fall outside the scope of article 28 of the EC Treaty.⁴⁴

Consequently article 28 could not be invoked by the defendants in the main proceedings to avoid prosecution, since a general prohibition on resale at a loss was not found to be a restriction within the meaning of article 28. One of the characteristics of rules concerning 'selling arrangements' (or 'market circumstances') is that they apply indistinctly to all operators without a purpose of protectionism. Another defining character is that it imposes restrictions on the retailer rather than the importer.⁴⁵

In Leclerc-Siplec,⁴⁶ it was established that a ban on televised advertising in the distribution sector did affect the marketing of products from other Member States and that of domestic products in the same manner. The ban was thus considered a selling arrangement falling outside the scope of article 28. Since it prohibited a particular form of promotion (televised advertising) of a particular method of marketing products (distribution),⁴⁷ it was emphasised that the prohibition did not prevent distributors from using other forms of advertising.⁴⁸ On the other hand, it was established in the Canal Satélite Digital case that the need in certain cases to adapt the products in question to the rules in force in the Member State in which they are marketed prevents the requirements from being treated as selling arrangements.⁴⁹

In the case Familiapress v. Heinrich Bauer Verlag,⁵⁰ which concerned an Austrian ban on games of chance in connection with publications, the European Court of Justice found, even though the relevant national legislation was directed against a method of sales promotion, that the ban would bear on the actual content of the products, in so far as the competitions in question form an integral part of the magazine in which they appear. As a result, the national legislation in question as applied to the facts of the case was not concerned with a selling arrangement as defined by the judgment in Keck and Mithouard.⁵¹ The ban was found to hinder the free movement of goods which, however, could be justified, provided that that prohibition would be proportionate to maintenance of press diversity and that objective could not be achieved by less restrictive means.⁵² The court found that such a national prohibition must not hinder the marketing of newspapers which, albeit containing prize games, puzzles or competitions, do not give readers residing in the Member State concerned the opportunity to win a prize.⁵³

The De Agostini case⁵⁴ concerned a Swedish ban on misleading advertising and advertising directed towards children. The European Court of Justice examined in accordance with the Keck ruling whether the ban 1) applied to all traders operating within the national territory and 2) affected in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States. The first requirement was found to be met, whereas on the second requirement, the court would not exclude that an outright ban of a type of promotion might have a greater impact on products from other Member States.⁵⁵ The court noted that the efficacy of the various types of promotion is a question of fact to be determined by the referring court. The court emphasised, however, that it was mentioned by the defendant in the main proceedings (De Agostini) that television advertising was the only effective form of promotion enabling it to penetrate the Swedish market since it had no other advertising methods for reaching children and their parents.⁵⁶ The court concluded that an outright ban on advertising aimed at children less than 12 years of age and of misleading advertising, as provided for by the Swedish legislation, was not covered by article 28 of the EC Treaty, unless it is shown that the ban does not affect in the same way, in fact and in law, the marketing of national products and of products from other Member States.⁵⁷

TK-Heimdienst⁵⁸ concerned an Austrian legislation under which bakers, butchers and grocers could make sales on rounds in a given administrative district, such as an Austrian Verwaltungsbezirk, only if they also traded from a permanent establishment in that administrative district or an adjacent municipality, where they would offer the same goods for sale as they did on rounds. The court concluded that the legislation concerned a selling arrangement, but established that the legislation did not affect in the same manner the marketing of domestic products and that of products from other Member States and consequently that the application of the legislation in fact impeded access to the market of the Member State of importation for products from other Member States more than it impeded access for domestic products.⁵⁹

Similarly in the Gourmet International case,⁶⁰ the European Court of Justice established that a Swedish prohibition on advertising in reality, except for a few insignificant exceptions, prohibited producers and importers from directing any advertising messages at consumers. The state was thus liable to impede access to the market by products from other Member States more than it impeded access by domestic products, with which consumers are instantly more familiar. The prohibition was consequently found to be a restriction within the meaning of article 28.⁶¹

In the DocMorris case,⁶² concerning a German prohibition on mail order sales of medicines, the Commission, amongst others, argued that the prohibition was merely a selling arrangement, fulfilling the requirements set out above, emphasising that:

It was admitted that the fact that the sale of medicinal products by mail order is precluded makes it more difficult for foreign pharmacies to gain access to the German market because they in fact are obliged to open their own pharmacy in Germany.⁶⁴ The court noted that the emergence of the Internet as a method of cross-border sale means that the scope and, by the same token, the effect of the prohibition must be looked at on a broader scale than just argued.⁶⁵

The court found that the prohibition did not affect the sale of domestic medicines in the same way as it affected the sale of those coming from other Member States since the prohibition was more of an obstacle to pharmacies outside Germany than to those within it. The court argued that even though the pharmacies in Germany cannot use mail order sale, they are still able to sell the products in their dispensaries. For pharmacies not established in Germany, the Internet provides a more significant way to gain direct access to the German market and the prohibition thus has a greater impact on those pharmacies.⁶⁶ This argumentation seem to be in line with the reasoning in De Agostini, where the court accepted the relevance of the argument that a prohibition on television advertising deprived a trader of the only effective form of promotion which would have enabled it to penetrate a national market.⁶⁷

Selling arrangements may even if they impose the same burden in law and in fact to national and foreign operators be considered a restriction within the meaning of article 28 of the EC Treaty if the selling arrangement has serious implications for inter-state trade. This could for example be a complete ban as discussed below under free movement of services and the Schindler case.⁶⁸ In the light of the DocMorris ruling, it may be difficult to imagine a selling arrangement which bans Internet sale and which is not to be considered more of an obstacle to foreign operators. It is clear from the DocMorris ruling that restrictions on the access to use the Internet is likely to have unequal consequences for domestic and foreign businesses respectively and thus does not qualify to be considered a selling arrangement within the Keck ruling.⁶⁹ Rules on selling arrangements are to be considered on the basis of factors such as the range of goods affected, the nature of the restriction, whether the impact is direct or indirect and the extent to which other selling arrangements are available.⁷⁰

The case of Herbert Karner v. Troostwijk⁷¹ concerned an Austrian prohibition on advertising indicating that goods come from an insolvent estate when they no longer constitute part of that estate. The court found such a provision to be a selling arrangements as defined in the Keck ruling.⁷² Both Keck-requirements were found to be satisfied. The court noted that contrary to the national provisions which gave rise to De Agostini and Gourmet International, this provision did not lay down a total prohibition on all forms of advertising in a Member State for a product which is lawfully sold there. Although such a prohibition is, in principle, likely to limit the total volume of sales in that Member State and consequently also to reduce the volume of sales of goods from other Member States, the court found it not to affect the marketing of products originating from other Member States more than it affected the marketing of products from the Member State in question.⁷³ Consequently the national provision was not caught by the prohibition in article 28 of the EC Treaty.

The advertisement giving rise to the case was posted in both a sales catalogue and on a website. Even though misleading advertising is harmonised in the EU, the relevant directive contains a right for Member States to adopt provisions with a view to ensuring more extensive consumer protection.⁷⁴ Such power must, however, be exercised in accordance with the fundamental freedoms of the EC Treaty.⁷⁵ Because the dissemination of advertising was found to be a secondary element in relation to the sale of the goods in question the activity was only examined under article 28 of the EC Treaty and not in the context of the free movement of services. This issue was dealt with by the Advocate General and is dealt with below in this thesis.⁷⁶

The Advocate General noted that the advertisement was published on the Internet which enabled potential buyers in other Member States to access the advertisement and to acquire goods at the auction. The Advocate General found that if the activity would not be a selling arrangement, and such advertisement was prohibited under the national provisions in question, trade between Member States would be hindered at least indirectly and potentially as such advertising becomes impossible.⁷⁷ It was found by the Advocate General that a total prohibition on advertisements stating that the goods advertised come from an insolvency estate goes beyond what is necessary in the interests of consumer protection and fair trading, and cannot therefore be justified by article 30 EC or overriding reasons in the general interest as dealt with immediately below.⁷⁸

2.3.2. Justifiable Restrictions

Even though a measure is considered to be a quantitative restrictions or a measure having equivalent effect within the meaning of article 28, such measure may be justified either under article 30 of the EC Treaty or by the concept of mandatory requirements as developed through case law and explained below. Quantitative restrictions can only be justified under article 30, whereas measures having equivalent effect may also be justified by mandatory requirements if the measure is applied indistinctly.⁷⁹ Distinctly applicable measures treat imported gods less favourable than domestic goods (different burden in law and in fact) and indistinctly applicable measures appear not to do so, but do in fact disadvantage imported goods by requiring them to satisfy additional requirements such as repackaging (same burden in law, different burden in fact).⁸⁰

2.3.2.1. Article 30

Restriction may by justified by virtue of article 30 of the EC Treaty which provides that articles 28 and 29 of the EC Treaty shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of:

Such restrictions may not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. In order for a restriction to be exempt under article 30 the challenged rule must come within at least one of the listed categories and must pass a proportionality test. The burden of proof rests with the Member State seeking to rely on it.⁸¹ As mentioned above, article 30 can be relied on to justify both quantitative restrictions and measures having equivalent effect (both distinctly and indistinctly applicable restrictions).

Where Community directives provide for the harmonisation of the measures necessary to ensure the objectives in article 30, recourse to this article is no longer justified.⁸² The situation may become a bit more complicated, where an area is only partially harmonised or harmonised by means of directives comprising minimum clauses. It is for the European Court of Justice to ensure that national regulation pursuing the justification-objectives of article 30 does not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.⁸³

In a case launched by the EU Commission against Ireland⁸⁴ in connection with Irish legislation requiring imported souvenirs and jewellery to bear an indication of origin or the word 'foreign', the court established that such a restriction to the free movement of goods could not be justified under article 30 since neither the protection of consumers nor the fairness of commercial transactions is included amongst the exceptions set out in the article. A similar conclusion was reached in a case concerning fixed prices for books,⁸⁵ where the European Court of Justice emphasised a strict interpretation of article 30 which does not allow for article 30 to cover objectives not expressly enumerated therein. Both consumers' interests and the protection of creativity and cultural diversity was rejected as valid objectives. The court emphasised, in another case, that the exceptions which are listed in article 30 may not be extended to cases other than those which have been exhaustively laid down and that the articles notably refer (only) to matters of a non-economic nature.⁸⁶ If the national rules in question make it possible in addition to achieve objectives of an economic nature which the Member State may also seek to achieve, it does, however, not exclude the application of article 30.⁸⁷

The European Court of Justice has, despite the firm rejection of objectives not listed in article 30, allowed national measures to be justified on environmental grounds.⁸⁸ It is for the national authorities to demonstrate in each case that their rules are necessary to give effective protection to the interests referred to in article 30.⁸⁹ Below are some examples of situations in which article 30 was invoked.

2.3.2.1.1. Public Morality

Henn and Darby⁹⁰ concerned a prohibition in United Kingdom on the importation of pornographic articles, which was invoked in connection with the import of obscene films and magazines into United Kingdom. The UK ban was found to constitute a quantitative restriction. The European Court of Justice established that the first sentence of article 30 means that a Member State may, in principle, lawfully impose prohibitions on the import from any other Member State of articles which are of an indecent or obscene character as understood by its domestic laws. With reference to the absence of a lawful trade in the same goods, the court concluded that the ban did not constitute a means of arbitrary discrimination or a disguised restriction on trade contrary to article 30.

In Conegate,⁹¹ it was concluded, in a similar context, that a Member State may not rely on grounds of public morality as defined by article 30 in order to prohibit the import of certain goods on the ground that they are indecent or obscene when its legislation contains no prohibition on the manufacture and marketing of the same goods on its territory. In order to rely on article 30, it should be possible, by taking into account all relevant legislation, to at least conclude that its purpose is, in substance, to prohibit the manufacture and marketing of those products.

2.3.2.1.2. Public Policy and Security

Public policy concerns include human rights, such as freedom of expression as further discussed below.⁹² The fact that national rules are categorised as public-order legislation does not mean that they are exempt from compliance with the provisions of the EC Treaty. The considerations underlying such national legislation can be taken into account by Community law only in terms of the exceptions to Community freedoms expressly provided for by the EC Treaty and, where appropriate, on the ground that they constitute overriding reasons relating to the public interest.⁹³ Whatever interpretation is to be given to the term 'public policy', it cannot be extended so as to include considerations of consumer protection.⁹⁴

The court has, in the context of public policy concerns within the area of freedom to provide services, established that it is not indispensable for the restrictive measure issued by the authorities of a Member State to correspond to a conception shared by all Member States with regards to the precise way in which the fundamental right or legitimate interest in question is to be protected.⁹⁵

The European Court of Justice has found that a ban on the export of coins which are not legal tender,⁹⁶ with a view to preventing their being melted down or destroyed in another Member State is justified on grounds of public policy within the meaning of article 30, because it stems from the need to protect the right to mint coinage which is traditionally regarded as involving the fundamental interests of the state.⁹⁷ The UK stated that the restrictions were enacted in order 1) to ensure that there is no shortage of current coins for public use, 2) to ensure that any profit resulting from any increase in the value of metal content of the coin accrues to the state rather than to an individual and 3) to prevent the destruction of these United Kingdom coins which, if it occurred within its jurisdiction would be a criminal offence, from occurring outside its jurisdiction. The court noted that it is for the Member States to mint their own coinage and to protect it from destruction.⁹⁸

Cullet v. Centre Leclerc⁹⁹ concerned French provisions compelling retailers to observe fixed retail selling prices which according to the European Court of Justice made it more difficult to distribute imported products on the market. The French government argued that destructive competition over the price of fuel could lead to the disappearance of a large number of service-stations and therefore to an inadequate supply network throughout the national territory. The French government referred to the threat to public order and security represented by the violent reactions which would have to be anticipated on the part of retailers affected by unrestricted competition. The European Court of Justice found that the French government failed to show that it would be unable, using the means at its disposal, to deal with the consequences which an amendment of the rules in question would have upon public order and security.

Campus Oil¹⁰⁰ concerned Irish rules requiring importers of petroleum products to purchase a certain proportion of their requirements from a state-owned company which operated a refinery in Ireland. The price was determined by the competent minister taking into account the costs incurred by the refining company. The state's decision to acquire the refinery was the need to guarantee, by keeping refining capacity in operation in Ireland, the provision of supplies of petroleum products in Ireland. The purchase requirement was found by the European Court of Justice to constitute a measure having equivalent effect to a quantitative restriction on imports within the meaning of article 28 of the EC Treaty.¹⁰¹ In determining the possible justification under article 30, the court applied a three-step test:¹⁰² 1) whether the rules are justified in the light of the community rules on the matter, 2) whether article 30 (public policy and public security in this case) covers the Irish rules and 3) whether the rules enable the fulfilment of a justifiable objective under article 30 in compliance with the principle of proportionality.

2.3.2.1.3. Health and Life

Sandoz BV¹⁰⁶ concerned a Dutch authorisation requirement for adding vitamins to foodstuff. Criminal proceedings was brought against Sandoz BV for selling and delivering in the Netherlands, without authorisation, vitamin-added foodstuff which was lawfully marketed in other Member States. Authorisation was rejected by the Dutch state with reference to possible danger to the public health. The national rules was found to be a measure having an effect equivalent to quantitative restrictions within the meaning of article 28 of the EC Treaty. The court found, however, in view of the uncertainties inherent in the scientific assessment of the harmfulness of vitamins, that the authorisation requirement was justified under article 30 on grounds of the protection of human health.

The court noted that in so far as there are uncertainties at the present state of scientific research, it is for the Member States, in the absence of harmonisation, to decide what degree of protection of the health and life of humans they intend to assure, having regard, however, for the requirements of the free movement of goods within the community. Those principles also apply to substances such as vitamins which are not as a general rule harmful in themselves but may have special harmful effects solely if taken to excess as part of the general nutrition.¹⁰⁷

On the question of proportionality, the court noted that national rules providing for such a prohibition are justified only if authorisations to market are granted when they are compatible with the need to protect health. Member States must consequently, in order to observe the principle of proportionality, authorise marketing when the addition of vitamins to foodstuffs meets a real need, especially a technical or nutritional one.

In a case concerning a Danish prohibition on the marketing of foodstuffs to which nutrients have been added,¹⁰⁸ the court found that such a prohibition must be based on a detailed assessment of the risk alleged by the Member State.¹⁰⁹ A marketing prohibition is the most restrictive obstacle to trade and may only be adopted if the real risk alleged for public health appears sufficiently established on the basis of the latest scientific data available at the date of the adoption of such decision. In such a context, the object of the risk assessment to be carried out by the Member State is to appraise the degree of probability of harmful effects on human health from the addition of certain nutrients to foodstuffs and the seriousness of those potential effects.¹¹⁰

Because such an assessment of risk contains uncertainty, it was accepted that a Member State may, in accordance with the precautionary principle, take protective measures without having to wait until the reality and seriousness of those risks are fully demonstrated, but the risk assessment cannot be based on purely hypothetical considerations.¹¹¹ Such a risk assessment may also take into consideration the cumulative effect of the presence on the market of several sources, natural or artificial, of a particular nutrient and of the possible existence in the future of additional sources which can reasonably be foreseen.¹¹²

A proper application of the precautionary principle presupposes, in the first place, the identification of the potentially negative consequences for health of the proposed addition of nutrients, and, secondly, a comprehensive assessment of the risk to health.¹¹³ The criterion of the nutritional need of the population of a Member State can play a role in its detailed assessment of the risk which the addition of nutrients to foodstuffs may pose for public health, but the absence of such a need cannot, by itself, justify a total prohibition of the marketing of foodstuffs lawfully manufactured and/or marketed in other Member States.¹¹⁴

In the UHT Milk Case,¹¹⁵ the European Court of Justice established that the concern to protect the health of humans by an import prohibition could be achieved by less restrictive means by requiring safeguards equivalent to those prescribed for domestic production of Ultra Heat Treated milk. The court attached importance to the fact that UHT milk can be kept for long periods at normal temperatures which obviate the need for control over the whole production cycle if the necessary precautions are taken at the time of the heat treatment. The court also noted that in the case in question, the conditions were satisfied for a presumption of accuracy in favour of the statements contained in certificates from the exporting state.

2.3.2.1.4. Industrial and Commercial Property

Industrial and commercial property (intellectual property) includes copyrights, trademarks, patents, designs and models. The area of intellectual property is excluded from the scope of this thesis, but is slightly touched upon in this context since this exemption constitutes an important derogation from article 28.¹¹⁶

It should be noted that rules on intellectual property have been substantially harmonised at community level, but without completely removing the problems entailed in the national nature of a number of rights. The determination of the conditions and procedures under which protection of intellectual property is granted is a matter for national rules in the absence of harmonised laws. It is the right of the proprietor of a protected design to prevent third parties from manufacturing and selling or importing, without its consent, products incorporating the design constitutes the very subject matter of his exclusive right.¹¹⁷ To prevent the application of the national legislation in such circumstances would therefore be tantamount to challenging the very existence of that right.¹¹⁸

A proprietor of an industrial or commercial property right protected by the law of a Member State cannot rely on that law to prevent the import of a product which is lawfully marketed in another Member State by the proprietor himself or with his consent (consumption). The court has further established that neither the copyright owner or his licensee, nor a copyright management society acting in the owner's or licensee's name, may rely on the exclusive exploitation right conferred by copyright to prevent or restrict the importation of sound recordings which have been lawfully marketed in another Member State by the owner himself or with his consent.¹¹⁹ It was established in Metronome Musik v. Music Point Hokamp¹²⁰ that the release into circulation of a sound recording cannot, by definition, render lawful other forms of exploitation of the protected work, such as rental or public performance which are of a different nature from sale or any other lawful form of distribution.

Warner Brothers and Metronome v. Christiansen¹²¹ concerned the compatibility with the free movement of goods of Danish copyright legislation restricting the hiring-out of video-cassettes, in a situation where a video-cassette was legally purchased in London and imported into Denmark with a view to hiring it out there. The European Court of Justice found the Danish legislation clearly justified on grounds of the protection of industrial and commercial property pursuant to article 30 of the EC Treaty. The court noted that it would be impossible to guarantee makers of films a remuneration which reflects a satisfactory share of the rental market if royalties could only be collected on the sales of video-cassettes. The court attached importance to the fact that the Danish legislation applied without distinction as to where the video-cassettes were produced. The court furthermore rejected that the marketing by a film-maker of a video-cassette containing one of his works, in a Member State which does not provide specific protection for the right to hire it out, should have repercussions on the right conferred on that same film-maker by the legislation of another Member State to restrain, in that State, the hiring-out of that video-cassette.

The Laserdisken Case¹²² concerned whether it is possible for the holder of an exclusive rental right to prohibit copies of a film from being offered for rental in a Member State when those copies were authorised for rental within another Member State. With reference to Warner Brothers and Metronome v. Christiansen the court concluded that the exclusive right to hire out various copies of the work contained in a video film can, by its very nature, be exploited by repeated and potentially unlimited transactions, each of which involves the right to remuneration. The specific right to authorise or prohibit rental would be rendered meaningless if it were held to be exhausted as soon as the object was first offered for rental.

In order to rely on the derogation in article 30 of the EC Treaty, concerning protection of industrial and commercial property, the industrial and commercial property must be used within the state invoking the derogation. It has been established that goods in transit do not involve use of the appearance of a protected design. The impediment to the free movement of goods caused by the a product's detention under customs control cannot be justified on grounds of the protection of industrial and commercial property. The manufacture and marketing of the product in question was lawful in the Member States where those operations took place and that transit does not form part of the specific subject matter of the design right in the Member State where transit takes place.¹²³

2.3.2.1.5. Arbitrary Discrimination and Proportionality

Measures must, in order to be justified under article 30, not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.¹²⁴ This provision is designed to prevent restrictions on trade based on the grounds mentioned in the first sentence of article 30 from being diverted from their proper purpose and used in such a way as either to create discrimination in respect of goods originating in other Member States or indirectly to protect certain national products.¹²⁵ The proportionality requirement entails that the restriction must pass both a test on suitability and one on necessity.¹²⁶ National rules or practices having, or likely to have, a restrictive effect on the import of products are compatible with the EC Treaty only to the extent that they are necessary for the effective protection of the aim pursued, and a national rule or practice cannot benefit from article 30 if the concerns may be protected just as effectively by measures which are less restrictive of intra-Community trade.¹²⁷

Measures adopted on the basis of article 30 can be justified only if they are such as to serve the interest which that article protects and if they do not restrict intra-community trade more than is absolutely necessary.¹²⁸ In Aragonesa,¹²⁹ the European court of Justice found a national restriction on the advertisement of alcohol to be in proper pursuance of public health concerns. On the proportionality test, the court emphasised that the national measure restricted freedom of trade only to a limited extent since it concerned only beverages having an alcoholic strength of more than 23 percent and that the measure did not prohibit all advertising of such beverages but merely prohibited it in specified places some of which (for example public highways and cinemas) are particularly frequented by motorists and young persons which are two categories of the population in regard to which the campaign against alcoholism is of quite special importance.¹³⁰

2.3.2.2. Mandatory Requirements

As mentioned above, measures having equivalent effect to quantitative restrictions may be justified under the pursuance of mandatory requirements.¹³¹ The mandatory requirements can only be applied to justify restrictions which are applied indistinctly, which means that the measures must be applicable to domestic products and to imported products without distinction.¹³² Distinctly applied restrictions may only be justified under article 30. It has, however, been argued that the European Court of Justice in a number of cases has begun to depart from the distinction between distinctly and indistinctly applicable restrictions and thus applying the language of mandatory requirements in respect of what are essentially distinctly applicable measures.¹³³

In the Cassis de Dijon case,¹³⁴ it was established that it is up to the individual states to regulate areas which are not yet harmonised on a community level. The court, however, emphasised that obstacles to the free movement within the community resulting from disparities between the national laws relating to the marketing of products must be accepted in so far as those provisions are necessary in order to satisfy mandatory requirements in particular to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defence of the consumer. In the actual case the fixing of a minimum alcohol content for alcoholic beverages was not found to fulfil such mandatory requirements.¹³⁵ The list of mandatory requirement has continuously been enlarged through case law.

The following non exhaustive list of mandatory requirements seems to be recognised by the European Court of Justice: The effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions, the defence of the consumer, protection of the environment, protection of working conditions, protection of cinema as a form of cultural expression, protection of national or regional socio-cultural characteristics, maintenance of press diversity, preventing the risk of seriously undermining the financial balance of the social security system and the protection of fundamental rights.¹³⁶

In order to justify national rules with reference to mandatory requirements, the rule must be non-discriminatory, fall within an area that has not been sufficiently harmonised and pursue an overriding requirements of general public importance. According to the case law of the European Court of Justice, the risk of misleading consumers cannot override the requirements of the free movement of goods and so justify barriers to trade, unless that risk is sufficiently serious.¹³⁷

In Yves Rocher,¹³⁸ it was established that even though protection of consumers against misleading advertising is a legitimate objective, a prohibition on eye-catching price comparisons, regardless of whether the comparison is true or false, was not found to be proportionate to the aim pursued. The court noted that the prohibition in question went beyond the requirements of the objective pursued, in that it affected advertising which is not at all misleading and contained comparisons of prices actually charged which can be of considerable use, in that it enables the consumer to make his choice in full knowledge of the facts. The court noted that a comparative examination of the laws of the Member States showed that information and protection of the consumer can be ensured by measures which are less restrictive of intra-Community trade than those at issue in the main proceedings.¹³⁹

A product lawfully produced and marketed in one Member State must, in principle, be admitted to the market of any other Member State. Technical and commercial rules may create barriers to trade only where those rules are necessary to satisfy mandatory requirements and to serve a purpose which is in the general interest and for which they are an essential guarantee. This purpose must be such as to take precedence over the requirements of the free movement of goods which constitutes one of the fundamental rules of the Community.¹⁴⁰

The most commonly invoked mandatory requirements are public health and consumer protection.¹⁴¹ Public health concerns may also be covered by the derogation in article 30 with reference to the protection of health and life. The protection of consumers seeks to strike a balance between the protection of the average consumer who is well-informed and reasonably observant and circumspect and the protection of the free movement of goods.¹⁴²

In an illustrative case, the European Court of Justice refused to accept a German prohibition of the use of 'Clinique' as trademark for cosmetic products. Germany argued that the name could mislead consumers to believe that it was a medicinal product. The court argued that those products are ordinarily marketed in other countries under the name 'Clinique' without apparently misleading the consumers there.¹⁴³

In another case, the court established that article 28 of the EC Treaty precluded a national measure prohibiting the import and marketing of a product, the quantity of which was increased during a short publicity campaign and the wrapping of which bore the marking '+ 10%'. The prohibition was based a) on the ground that the presentation could induce the consumer into thinking that the price of the goods offered was the same as that at which the goods had previously been sold in their old presentation and b) on the ground that the new presentation gave the impression to the consumer that the volume and weight of the product had been considerably increased. The court argued that a reasonably circumspect consumers may be deemed to know that there is not necessarily a link between the size of publicity markings relating to an increase in a product's quantity and the size of that increase.¹⁴⁴

It is clear from the mentioned cases that a mandatory requirement, as a starting point, may only be invoked in situations where a measure is necessary to protect the average consumer who is reasonably well informed and reasonably observant and circumspect. The court has acknowledged considerations concerning social, cultural or linguistic differences between Member States.¹⁴⁵ The court has also accepted to lower the requirements in situations where commercial activities are directed towards a category of people who are particularly vulnerable.¹⁴⁶ Generally, it can be said that the risk of misleading consumers cannot override the requirements of the free movement of goods and so justify barriers to trade, unless that risk is sufficiently serious having regard all the relevant factors, including the risk of error in relation to the group of consumers concerned.¹⁴⁷ The court tends, however, to be rather sceptical of the claims for consumer protection, because it fears that such arguments are simply a disguise for protectionism.¹⁴⁸

A restriction must, in order to be justified as a mandatory requirement, be proportionate to the aim pursued and that objective might not be attained by less restrictive measures.¹⁴⁹ Labelling seems to be the European Court of Justice's preferred solution to many proportionality problems.¹⁵⁰ This may, however, give rise to problems in situations where such labels themselves must be adjusted in accordance with national requirements. The Court has not excluded the possibility that a Member State may require producers or vendors to alter the description of a foodstuff where a product offered for sale under a particular name is so different from the products generally understood as falling within that description, that it cannot be regarded as falling within the same category. Where the difference is of minor importance, appropriate labelling should be sufficient to provide the purchaser or consumer with the necessary information.¹⁵¹

A measure introduced by a Member State cannot be regarded as necessary to achieve the aim pursued if it essentially duplicates controls which have already been carried out in the context of other procedures, either in the same State or in another Member State. A product which is lawfully marketed in one Member State must in principle be able to be marketed in any other Member State without being subject to additional controls, save in the case of exceptions provided for or allowed by Community law.¹⁵²

There seem in practice to be only little, if any at all, difference between the requirements to be met in terms of justification of indistinctly applied (affect in the same way, in law and in fact, the marketing of domestic products and of those from other Member States) mandatory requirements and those to be met with reference to the exhaustive list of objectives mentioned in article 30 of the EC Treaty.¹⁵³ For example, in De Agostini,¹⁵⁴ the court did not distinguish between overriding requirements of general public importance (article 28) or the aims laid down in article 30 of the EC Treaty. For both purposes, the restriction had to be necessary for meeting the mandatory requirement or aim, be proportionate for that purpose and it must not be possible to meet the overriding requirements or aims by less restrictive measures.

2.4. Free Movement of Services

According to article 49 of the EC Treaty, restrictions to the freedom to provide services within the Community are prohibited in respect of nationals of Member States who are established in another Member State than the state of the person for whom the services are intended.¹⁵⁵ A person who provides a service may, in order to do so, temporarily pursue his activity, in the state where the service is provided, under the same conditions as are imposed by that state on its own nationals. Article 46(1) concerning measures on grounds of public policy, public security or public health applies also to free movement of service according to article 55.

A service within the meaning of the treaty is in article 50 defined as services that are normally provided for remuneration and which are not governed by the provisions relating to freedom of movement for goods, capital and persons. Services include in particular activities of an industrial or a commercial character, activities of craftsmen and activities of the professions.

That a service is 'normally provided for remuneration' does not mean that the service needs to be paid for by those for whom it is performed.¹⁵⁶ It has been established that the essential characteristic of remuneration lies in the fact that it constitutes consideration for the service in question, and is normally agreed upon between the provider and the recipient of the service. The remuneration requirement can be laid out as a question on whether the entity in question is seeking to engage in gainful (commercial) activity.¹⁵⁷ A service is any activity through which a provider participates in the economy, irrespective of his legal status or aims, or the field of action concerned.¹⁵⁸ Also harmful services and services which are questionable on moral grounds are services under the EC Treaty.¹⁵⁹ This does, however, not exclude that restrictions to such services can be legally justified by overriding public interest considerations as discussed below.

The freedom to provide services also covers offers and the like, where there is no prior existence of an identifiable recipient of the service. It has been established that article 49 also covers services which the provider offers by telephone to potential recipients established in other Member States and provides without moving from the Member State in which he is established.¹⁶⁰ The freedom similarly applies to services which a provider offers via the Internet, and so without moving, to recipients in other Member States.¹⁶¹ In Bond van Adverteerders¹⁶² the European Court of Justice established that the transmission of television programmes consists of two separate transfrontier services (relaying television programmes and broadcasting advertisements respectively). The distinction between when a restriction falls under article 28 and article 49 respectively is discussed below.¹⁶³

The provisions of the EC Treaty on freedom to provide services does not apply to activities whose relevant elements are confined within a single Member State.¹⁶⁴ However, a transaction cannot be regarded as a service provided only within a Member State, when the person in receipt of the services, before the termination of the contractual relations between the parties, has taken up residence in another Member State.¹⁶⁵ The European Court of Justice seems to go far to include activities which could arguable be considered wholly internal.¹⁶⁶ In Gourmet International,¹⁶⁷ concerning a Swedish prohibition on the advertising of alcoholic beverages, the court established that the prohibition on advertising had a particular effect on the cross-border supply of advertising space, given the international nature of the advertising market in the category of products to which the prohibition relates, and thereby constituted a restriction on the freedom to provide services as defined in article 49 of the EC Treaty.¹⁶⁸

The freedom to provide services involves not only the freedom of the provider to offer and supply services to recipients in a Member State other than that in which the supplier is located, but also the freedom to receive or to benefit as recipient from the services offered by a supplier established in another Member State without being hampered by restrictions.¹⁶⁹ In the Alpine Investments case,¹⁷⁰ it was established that a prohibition against telephoning potential clients in other Member States without their prior consent ('cold calling') may constitute a restriction on freedom to provide services since it deprives the operators concerned of a rapid and direct technique for marketing and contacting clients. The court held that the EC Treaty not only covers restrictions laid down by the state of destination but also those laid down by the state of origin.¹⁷¹ This thesis deals, however, only with the restriction imposed by foreign states, and not by the state in which the Business is established.

2.4.1. Restrictions

Article 49 of the EC Treaty requires not only the elimination of all discrimination against a person providing services on the ground of his nationality but also the abolition of any restriction, even if it applies without distinction to national providers of services and to those of other Member States, when it is liable to prohibit or otherwise impede the activities of a provider of services established in another Member State where he lawfully provides similar services. In particular, a Member State may not make the provision of services in its territory subject to compliance with all the conditions required for establishment.¹⁷²

In the perspective of a single market and in order to permit the realisation of its objectives, the freedom to provide services precludes the application of any national legislation which has the effect of making the provision of services between Member States more difficult than the provision of services purely within one Member State.¹⁷³ It should be noted that a prohibition concerning a specific marketing technique does not constitute a restriction on freedom to provide services within the meaning of article 49 solely by virtue of the fact that other Member States apply less strict rules to providers of similar services established in their territory.¹⁷⁴

The European Court of Justice seems to attach importance to the possibilities of utilising different effective media. In Säger,¹⁷⁵ the court noted that a restriction is all the less permissible where the service (monitoring and renewal service in connection with patents) is supplied without it being necessary for the person providing it to visit the territory of the Member State where it is provided.¹⁷⁶ Similarly in Alpine Invest, the court emphasised that the prohibition in question deprived the operators a rapid and direct technique for marketing and for contacting potential clients (cold calling) in other Member States.¹⁷⁷

In a case concerning a specific tax on satellite dishes, the court attached importance to the fact that a tax had the effect of a charge on the reception of television programmes transmitted by satellite which does not apply to the reception of programmes transmitted by cable, since the recipient does not have to pay a similar tax on that method of reception. The court noted that most television broadcasting programmes transmitted from those Member States could only be received by satellite dishes.¹⁷⁸ As mentioned above, in connection to the free movement of goods, the court has attached importance to the effectiveness of the Internet.¹⁷⁹ A similarly clear reference was not made in the Gambelli case which, however, refers to the consideration in Alpine Invest, as just mentioned.¹⁸⁰ It seems clear that the court also in this context is likely to recognise the importance of the Internet as medium, capable of supporting the realisation of the goals of the Internal Market which is also in line with the principles set out in the 2000 E-Commerce Directive dealt with below.¹⁸¹

2.4.2. Justifiable Restrictions

National rules which are not applicable to services without discrimination as regards their origin are compatible with Community law only if they can be brought within the scope of an express exemption, such as that contained in article 46 of the EC Treaty. It should be noted that, in line with the exemptions in article 30, economic aims cannot constitute grounds of public policy within the meaning of article 46.¹⁸²

National rules which are indistinctly applied, impose an additional burden on foreign service providers and in the absence of harmonisation such restrictions come within the scope of article 49, if the application of the national legislation to foreign persons providing services is not justified by overriding reasons relating to the public interest, or if the requirements embodied in that legislation are already satisfied by the rules imposed on those persons in the Member State in which they are established.¹⁸³

Article 49 does not preclude national rules which are applied without distinction as regards the origin, whether national or foreign, of those advertisements, the nationality of the person providing the service, or the place where he is established.¹⁸⁴ However as seen in Alpine Investments case,¹⁸⁵ non-discriminatory measures may constitute a restriction on freedom to provide services if it restrict access to markets. Such restrictions must be treated as indistinctly applied restrictions as mentioned above.

The freedom to provide services may be limited only by rules which are justified by imperative reasons relating to the public interest and which apply to all persons or undertakings pursuing an activity in the state of destination, in so far as that interest is not protected by the rules to which the person providing the services is subject in the Member State in which he is established.¹⁸⁶ The application of national rules to providers of services established in other Member States must be appropriate for securing the attainment of the objective which they pursue and must not go beyond what is necessary in order to attain it.¹⁸⁷

The court has recognised the following overriding reasons relating to the public interest: professional rules intended to protect recipients of the service, protection of intellectual property, the protection of workers, consumer protection, the conservation of the national historic and artistic heritage, turning to account the archaeological, historical and artistic heritage of a country and the widest possible dissemination of knowledge of the artistic and cultural heritage of a country.¹⁸⁸

The case, Bond van Adverteerders,¹⁸⁹ concerned the justification on grounds of public policy of a Dutch prohibition on relaying television programmes from other states if the (commercial) programmes contained advertising intended especially for the public in the Netherlands or they had Dutch subtitles. The court ruled that discriminatory regulation is compatible with Community law only if it can be brought within the scope of an express derogation which in this case would be the public policy derogation. The court did not find that the Dutch legislation was justified on grounds of public policy. The court noted that economic aims, such as that of securing for a national public foundation all the revenue from advertising cannot constitute ground of public policy within the meaning of the EC Treaty. Also the aim of maintaining the non-commercial and pluralistic nature of broadcasting was refused because this objective could be achieved in less restrictive and non-discriminatory ways.

In the Schindler¹⁹⁰ case, concerning restrictions on lotteries, it was left to national authorities to determine what is required to protect players and, maintain order in society, as regards the manner in which lotteries are operated, the size of the stakes, and the allocation of the profits they yield. In those circumstances, it is for them to assess not only whether it is necessary to restrict the activities of lotteries but also whether they should be prohibited, provided that those restrictions are not discriminatory.¹⁹¹ In the case, Familiapress v. Heinrich Bauer Verlag,¹⁹² which concerned free movement of goods it was established, with reference to the Schindler case, that a ban on games of chance in connection with publications did not entail corresponding special features, since the Schindler case concerned exclusively large-scale lotteries in respect of which the discretion enjoyed by national authorities was justified because of the high risk of crime or fraud.¹⁹³

The Piergiorgio Gambelli¹⁹⁴ case dealt with an Italian ban prohibiting, on pain of criminal penalties, the organisation of, marketing of and participation in unlicensed gambling activities.¹⁹⁵ The case concerned criminal proceedings brought against a number of Italians for collaborating in Italy with a UK-based bookmaker (Stanley International Betting Ltd) in the activity of collecting bets.¹⁹⁶ Betting data was sent via the Internet and the Italian agencies were also assisting in the transfer of money.

The court noted that when a company, established in a Member State (such as Stanley), pursues the activity of collecting bets through the intermediary of an organisation of agencies established in another Member State (such as the defendants in the main proceedings), any restrictions on the activities of those agencies constitute obstacles to the freedom of establishment.¹⁹⁷ The prohibition was also found to be a restriction on the free movement of services.¹⁹⁸ The Italian law prohibited individuals in Italy from participating in foreign online betting activities when the individual would be using his credit card to arrange payments. This prohibition, enforced by criminal penalties, on participating in betting games organised in Member States other than in the country where the bettor was established was found to constitute a restriction on the freedom to provide services.¹⁹⁹

The European Court of Justice left it to the national court to decide whether the restrictions if applied without discrimination was 1) justified by imperative requirements in the general interest, 2) was suitable for achieving the objective which they pursue and 3) did not go beyond what is necessary in order to attain it. The court emphasised that the risk of reduction of tax revenue does not constitute a matter of overriding general interest which may be relied on to justify a restriction on the freedom of establishment or the freedom to provide services.

It was also noted by the court that a restriction must reflect a concern to bring about a genuine diminution of gambling opportunities, and the financing of social activities through a levy on the proceeds of authorised games must constitute only an incidental beneficial consequence and not the real justification for the restrictive policy adopted.²⁰⁰ The court admitted that moral and financially harmful consequences of gambling may serve to justify the preservation of public order. It was, however, emphasised that in so far as the authorities of a Member State encourage consumers to participate in gambling activities to the financial benefit of the public purse, the authorities of that State cannot invoke public order concerns.²⁰¹

2.4.3. The Relationship to the Right of Establishment

Article 43 of the EC Treaty prohibits restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State, including restrictions on the setting-up of agencies, branches or subsidiaries. The freedom of establishment includes the right to take up and pursue activities as self-employed persons and to set up and manage undertakings under the conditions laid down for its own nationals by the law of the country where such establishment is effected. However, application of measures providing for special treatment for foreign nationals on grounds of public policy, public security or public health is exempt pursuant to article 46(1). This exception also applies to the free movement of services which is dealt with above.

In the Gephard²⁰² case, it was established that the situation of a Community national who moves to another Member State of the Community in order there to pursue an economic activity is governed by the chapter of the EC Treaty on the free movement of workers, or the chapter on the right of establishment or the chapter on services, these being mutually exclusive. The concept of establishment within the meaning of the Treaty is therefore a very broad one, allowing a Community national to participate, on a stable and continuous basis, in the economic life of a Member State other than his state of origin and to profit therefrom. In contrast, where the provider of services moves to another Member State, the provisions of the chapter on services envisage that he is to pursue his activity there on a temporary basis. The temporary nature of the activities in question has to be determined in the light, not only of the duration of the provision of the service, but also of its regularity, periodicity or continuity. The fact that the provision of services is temporary does not mean that the provider of services within the meaning of the Treaty may not equip himself with some form of infrastructure in the host Member State (including an office, chambers or consulting rooms) in so far as such infrastructure is necessary for the purposes of performing the services in question.

The relationship between the rights to provide service and those of establishments is a matter of in which way the services is to be provided. The scope of this thesis is cross-border activities without establishment in the enforcing state. The freedom to provide service must be the primary freedom for the Business to rely on. The European Court of Justice has, however, established that Member State cannot be denied the right to take measures to prevent the exercise by a person providing services whose activity is entirely or principally directed towards its territory for the purpose of avoiding the professional rules of conduct which would be applicable to him if he were established within that state. The court has found that such a situation may be subject to judicial control under the provisions of the chapter relating to the right of establishment and not of that on the provision of services.²⁰³

It was further in the Knoors Case noted that the liberties of the EC Treaty could not be fully realised if Member States can refuse to grant the benefit of freedom to provide services to those of their nationals who have taken advantage of the freedom of movement and establishment and who have acquired, by virtue of such facilities, the necessary trade qualifications in a Member State other than that whose nationality they possess.²⁰⁴ In the Bouchoucha case, the court found that in the absence of Community legislation on the professional practice of the field in question (osteopathy) each Member State is free to regulate the exercise of that activity within its territory, without discriminating between its own nationals and those of the other Member States.²⁰⁵ It has been suggested that the reasoning in this case is based on an attempted 'abuse' situation, in which a Member State had a legitimate interest in preventing its own nationals from evading the provisions of national legislation by attempting to use article 43 to rely on a 'lesser' qualification obtained in another Member State.²⁰⁶

The provisions on freedom of establishment will not be further dealt with in this thesis.

2.4.4. Draft Directive on Services in the Internal Market

The Commission has proposed a directive on services in the Internal Market.²⁰⁷ The future for this directive is quite uncertain and it will only be mentioned here for good measure. The draft directive approach services in general in order to facilitate the freedom of establishment for service providers and the free movement of services. The directive applies to information society services whether these services are comprised by the 2000 E-Commerce Directive or not.²⁰⁸ The approach adopted in the directive is similar to the 2000 E-Commerce Directive, as dealt with below, which establish a country of origin principle with some derogations and harmonisation. The derogations are either general, or temporary or may be applied on a case-by-case basis. The directive lay on Member States to simplify procedures and requirements to the services and service providers and guarantee free movement of services. Member States will have to eliminate certain legislation and evaluate the justification and proportionality of a number of requirements.

The draft directive deals with services supplied by providers established in a Member State. 'Services' is defined in accordance with the European Court of Justice's case law on article 50 of the EC Treaty.²⁰⁹ Article 16 of the proposal contains a country of origin principle similar to the one in the 2000 E-Commerce Directive, providing that Member States shall ensure that providers are subject only to the national provisions which fall within the coordinated field, of their state of origin. In article 4(1) number 9, the coordinated field is defined as 'any requirement applicable to access to service activities or to the exercise thereof'.

A number of general derogations are made to the scope which inter alia exclude intellectual property rights, the freedom of parties to choose the law applicable to their contract and contracts for the provision of services concluded by consumers to the extent that the provisions governing them are not completely harmonised at community level.²¹⁰ Some transitional derogations from the country of origin principle is given in article 18 which provides that inter alia gambling activities which involve wagering a stake with pecuniary value in games of chance, including lotteries and betting transactions are excluded in a transitional period.

2.5. The 2000 E-Commerce Directive

The 2000 E-Commerce Directive²¹¹ is a cornerstone in the EU legislative framework which seeks to develop electronic commerce within the Community. The idea of the directive is presented in a 1997 communication from the Commission²¹² along with other initiatives concerning inter alia electronic signatures and electronic money institutions.²¹³ The purpose of the 2000 E-Commerce Directive is, according to article 1(1), to contribute to the proper functioning of the Internal Market by ensuring the free movement of 'information society services' between Member States. In order to achieve this objective the directive comprises a country of origin principle and an approximation of rules concerning:

The focus in this context is on the country of origin principle and not on the substantive harmonisation. The idea of the country of origin principle is that businesses, as a starting point, only have to comply with the legislation in the country of establishment in connection with providing information society services.

2.5.1. Information Society Services

The 2000 E-Commerce Directive deals with so-called information society services as defined in article 1(2) of directive 98/34 as amended by directive 98/48.²¹⁴ 'Information society services' is defined as any service 1) normally provided for remuneration, 2) at a distance, 3) by electronic means and 4) at the individual request of a recipient of services. This definition is accompanied by an indicative list of services which are not covered by the definition.²¹⁵

The first requirement of 'normally provided for remuneration' is to be interpreted in accordance with the case law on the freedom movement of service,²¹⁶ which inter alia excludes activities carried out by a state without economic consideration in the context of its duties, in particular, in the social, cultural, educational and judicial fields.²¹⁷ Information society services are not solely restricted to services giving rise to online contracting but also, in so far as they represent an economic activity, extend to services which are not remunerated by those who receive them, such as those offering online information or commercial communications, or those providing tools allowing for search, access and retrieval of data.²¹⁸ The use of electronic mail or equivalent individual communications for instance by natural persons acting outside their trade, business or profession including their use for the conclusion of contracts between such persons is not an information society service. The contractual relationship between an employee and his employer is also not an information society service.²¹⁹

'At a distance' means that the services is provided without the parties being simultaneously present and excludes services provided in the physical presence of the provider and the recipient, even if they involve the use of electronic devices.²²⁰ As examples of services not provided at a distance, are mentioned the consultation of an electronic catalogue in a shop with the customer on site, plane ticket reservation at a travel agency in the physical presence of the customer by means of a network of computers and electronic games made available in a video-arcade where the customer is physically present.²²¹

'By electronic means' means that the service is sent initially and received at its destination by means of electronic equipment for the processing (including digital compression) and storage of data, and entirely transmitted, conveyed and received by wire, by radio, by optical means or by other electromagnetic means.²²² The information society services includes economic activities which take place online, including, in particular, the selling of goods online, whereas activities such as the delivery of goods as such or the provision of services off-line are not covered.²²³ Off-line services such as for example distribution of CD-ROMs are not covered. The definition excludes services having material content even though provided via electronic devices such as automatic cash or ticket dispensing machines. Services which are not provided via electronic processing/inventory systems are excluded, such as voice telephony services, telefax or telex services, telephone/telefax consultation of for example doctors and lawyers and telephone/telefax direct marketing.²²⁴ Activities which by their very nature cannot be carried out at a distance and by electronic means, such as the statutory auditing of company accounts or medical advice requiring the physical examination of a patient are not information society services.²²⁵

That the service is to be provided at the 'individual request of a recipient of services' means that the service is to be provided through the transmission of data on individual request. Annex V excludes services provided by transmitting data without individual demand for simultaneous reception by an unlimited number of individual receivers (point to multipoint transmission) and mention a) television broadcasting services (including near-video on-demand services) covered by article 1(1)(a) of Directive 89/552,²²⁶ b) radio broadcasting services and c) televised teletext. Services which are transmitted point to point, such as real video-on-demand or the provision of commercial communications by electronic mail, are included in the scope of application.²²⁷

The definition of information society services is media-neutral and is thus not limited to certain known media. It is, however, obvious that services provided over the Internet is the main target of the directive.²²⁸ The directive includes services delivered via other media and services consisting of the transmission of information via a communication network, in providing access to a communication network or in hosting information provided by a recipient of the service.²²⁹

Article 2(1)(d) of the 2000 E-Commerce Directive provides that the 'recipient of the service' is any natural or legal person who, for professional ends or otherwise, uses an information society service, in particular for the purposes of seeking information or making it accessible. The definition covers all types of usage of information society services, both by persons who provide information on open networks such as the Internet and by persons who seek information on the Internet for private or professional reasons.²³⁰

2.5.2. General Delimitation

Besides the delimitation which is entailed in the definition of information society services, the 2000 E-Commerce Directive comprises a general delimitation and certain exceptions which only concerns the country of origin principle ('the general exception' and 'specific exceptions'). The general delimitation is found in article 3(5) and excludes 1) the field of taxation, 2) questions relating to information society services covered by the data protection directives,²³¹ 3) questions relating to agreements or practices governed by cartel law and 4) gambling activities which involve wagering a stake with monetary value in games of chance, including lotteries and betting transactions.

The exclusion of gambling activities from the scope of application covers only games of chance, lotteries and betting transactions which involve wagering a stake with monetary value. It does not cover promotional competitions or games where the purpose is to encourage the sale of goods or services and where payments, if they arise, serve only to acquire the promoted goods or services.²³² The fiscal aspects of electronic commerce are also generally excluded.²³³

The exclusion of questions relating to information society services covered by the data protection directives is introduced because these directives already establish a legal framework in the field of personal data and therefore, it is not necessary to cover this issue to ensure the smooth functioning of the Internal Market, in particular the free movement of personal data between Member States.²³⁴ The data protection directives are fully applicable to information society services which is also apparent from recent case law.²³⁵ The exclusion was introduced to avoid any interference between the directives.²³⁶

2.5.3. The Country of Origin Principle

The 2000 E-Commerce Directive comprises a country of origin principle which consists of two elements, i.e. 1) a principle of home country control and 2) a principle of mutual recognition.²³⁷ The country of origin principle applies only to services provided between Member States and not to services supplied by service providers established in a third country or services provided only to third countries.²³⁸ The country of origin principle can thus not be invoked by a business established outside the Internal Market or be invoked by a business established in the Internal Market against legal requirement imposed by states outside the Internal Market.

The country of origin principle is intended to support the Treaty’s goal of free movement of services and is elaborated along the lines of a similar principle in the 1989 Television Without Frontier Directive.²³⁹ The interpretation of the country of origin principle in that directive is of value for the interpretation of the corresponding principle in the 2000 E-Commerce Directive.²⁴⁰ The relationship between the country of origin principles in the two directives was confirmed by the European Court of Justice (Advocate General).²⁴¹

Article 2 of the 1989 Television Without Frontier Directive provides that Member States shall ensure that all television broadcasts transmitted by broadcasters under its jurisdiction comply with the law applicable to broadcasts intended for the public in that Member State. Other Member States shall ensure freedom of reception and may not restrict retransmission of television broadcasts from EU member states for reasons which fall within the fields coordinated by the directive. The receiving Member State (country of destination) may, exceptionally and under specific conditions provisionally suspend the retransmission of televised broadcasts.²⁴²

In order to ensure an effective protection of public interest objectives, information society services should be supervised at the source of the activity.²⁴³ The principle of home country control is found in article 3(1) and provides that 'Member States shall ensure that the information society services provided by a service provider established on its territory comply with the national provisions applicable in the Member State in question which fall within the coordinated field'. The objective of the home country control is to ensure effective law enforcement by the authorities which have effective access to law enforcement, i.e. the authorities in the state in which the service provider is established.²⁴⁴

The place at which a service provider is established is to be determined in conformity with the case law of the European Court of Justice, according to which, the concept of establishment involves the actual (effectively) pursuit of an economic activity through a fixed establishment for an indefinite period.²⁴⁵ It is emphasised that the presence and use of the technical means and technologies required to provide the service (for example servers) do not, in themselves, constitute an establishment of the provider.²⁴⁶ It will usually be straightforward to establish the place where a service provider pursues its economic activity. If the service provider has several places of establishment, the place of establishment is the place from which the service concerned is provided. If it is difficult to determine from which of several places of establishment a given service is provided, it should be determined where the provider has the centre of his activities relating to this particular service.²⁴⁷ In the test set-up of this thesis the place of establishment is clearly defined and thus easy to determine.

According to the principle of home country control, Member States must ensure compliance with national provisions, no matter where in the Internal Market the activity is directed. It is obvious that states are obliged to maintain a geographical scope of application for the concerned national legislation that covers the entire Internal Market. This means that also national criminal law applies to activities carried out in a foreign market, even if the activity is not illegal there.²⁴⁸ Any other conclusion would not correspond with the objective of providing protection for all citizens in the Internal Market and of improving mutual trust between Member States.²⁴⁹

Article 3(2) comprises the principle of mutual recognition and provides that 'Member States may not, for reasons falling within the coordinated field, restrict the freedom to provide information society services from another Member State'. This principle is an obvious counterpart to the principle of home country control which provides that states should not intervene in areas covered by the principle of home country control, where the activity is supervised in the country of origin. The principle underlines the mutual confidence which is reflected in the country of origin principle.

2.5.3.1. The General Exception

Member States may under certain circumstances take measures to derogate from the principle of mutual recognition.²⁵⁰ The provision is intended for very specific cases, where for example a state seeks to protect fundamental societal interests, such as applying a law which would forbid the arrival of racist messages.²⁵¹ The derogation requires that intervention is necessary for one of the following reasons:

The measure must be taken against a given information society service which prejudices these objectives or which presents a serious and grave risk of prejudice to the objectives. This means that also preventive measures can be justified under article 3(4). The measure must be proportionate to the objective pursued. The principles in the exception must be understood in the light of existing case law,²⁵² which provides that national measures liable to hinder or make less attractive the exercise of a fundamental freedom guaranteed by the EC Treaty must 1) be applied in a non-discriminatory manner, 2) be justified by imperative requirements in the general interest, 3) be suitable for securing the attainment of the objective which they pursue and 4) not go beyond what is necessary in order to attain it.

Article 3(4) does not cover all the reasons identified by the European Court of Justice in the context of articles 28 and 49 of the EC Treaty as justifying a restriction on the ground of defending the general interest. In addition to public policy, public security and public health as found in article 46 of the EC Treaty, the general exemption identifies only the protection of consumers, including investors. The exhaustive nature of the list means that some of the mandatory requirements, recognised by the European Court of Justice in the context of the free movement of services, cannot provide justification for measures taken under article 3(4). The article covers measures taken on a case-by-case basis against a specific service provided by a given operator and can thus not justify general measures.²⁵³

A Member State wishing to restrict the free movement of an information society service must, before taking such measures, ask the Member State in which the service provider is established to take measures and wait an unspecified time until it is possible to establish that the state did not take such measures or that the measures were inadequate. The Commission and the Member State where the service provider is established must be informed of the intention to take measures under this general exception.²⁵⁴ This request and notification procedure is notably without prejudice to court proceedings, including preliminary proceedings and acts carried out in the framework of a criminal investigation, and may furthermore be derogated from in the case of urgency.²⁵⁵

It is provided in article 1(3) that the directive complements Community law applicable to information society services without prejudice to the level of protection for, in particular, public health and consumer interests, as established by Community acts and national legislation implementing them in so far as this does not restrict the freedom to provide information society services. This article must be understood as allowing Member States to keep a stricter regulation in accordance with a minimum-clause, insofar the enforcement hereof does not constitute a restriction on the freedom to provide information society services. In recital 57 there is made a reference to the European Court of Justice’s case law on circumvention, concerning Member States' right to take measures against a service provider that is established in another Member State, but directs all or most of his activity to the territory of the first Member State, if the choice of establishment is made with a view to evading the legislation that would have applied to the provider if he had been established on the territory of the first Member State.²⁵⁶

2.5.3.2. The Coordinated Field

Both the principle of home country control and the principle of mutual recognition refer to the coordinated field. The coordinated field is the substantive scope of the country of origin principle, i.e. which requirements should be controlled (solely) at the source. The coordinated field concerns requirements applicable to either information society service providers or the information society service itself. It is of no importance whether the rule is of a general nature or designed specifically for information society services or the providers hereof. The coordinated field concerns requirements concerning both the taking up of an activity as provider of information society services and the requirements concerning the pursuit of such activities.²⁵⁷ The directive provides in article 2(1)(h) that for example requirements concerning qualifications, authorisation or notification and requirements regarding the quality or content of the service including those applicable to advertising and contracts, or requirements concerning the liability of the service provider are included.

The coordinated field covers only requirements relating to online activities such as online information, online advertising, online shopping, online contracting,²⁵⁸ but it does not concern Member States’ legal requirements relating to goods, such as safety standards, labelling obligations, or liability for goods, or Member States’ requirements relating to the delivery or the transport of goods, including the distribution of medicinal products.²⁵⁹ The coordinated field does not cover the exercise of rights of pre-emption by public authorities concerning certain goods, such as works of art.²⁶⁰

The country of origin principle in the 2000 E-Commerce Directive differs from the corresponding principle in the 1989 Television Without Frontier Directive by including a definition of the coordinated field, whereas the latter directive only refers to 'fields coordinated by this directive'.

In the De Agostini case²⁶¹ the European Court of Justice elaborated on the scope of that country of origin principle. The case concerned the Swedish Consumer Ombudsman’s intervention against a Swedish company's advertising in Sweden through a broadcaster (TV3) established in the United Kingdom. The Swedish Consumer Ombudsman intended to fine the Swedish company for breaching a Swedish ban on television advertisement designed to attract the attention of children under 12 years and misleading advertising respectively. The European Court of Justice established that the directive only partially coordinates television advertising and sponsorship and that the directive does not have the effect of excluding completely and automatically the application of rules other than those specifically concerning the broadcasting and distribution of programmes.²⁶²

The European Court of Justice established that the directive contains a set of provisions specifically devoted to the protection of minors in relation to television programmes and that the directive precludes the application of a domestic broadcasting law which provides that advertisements broadcast in commercial breaks on television must not be designed to attract the attention of children under 12 years of age.²⁶³ Conversely, it was found that the directive does not preclude a Member State from taking, pursuant to general legislation on misleading advertising, measures against an advertiser in relation to television advertising broadcast from another Member State, provided that those measures do not prevent the retransmission, as such, in its territory of television broadcasts coming from that other Member State.²⁶⁴ The latter area was not found to be coordinated/harmonised by the directive.

By introducing a broad definition of the coordinated field in the 2000 E-Commerce Directive, the uncertainty which gave rise to the De Agostini case, should be eliminated. The flip side is that the country of origin principle also applies to areas of law which are not harmonised, neither by the directive itself nor by other community legislation. The broad definition in the 2000 E-Commerce Directive is found to be justified by the need to ensure clarity as regards the scope.

2.5.3.3. Specific Exceptions

Article 3(3) refers to the annex of the directive which contains derogations concerning specific areas which cannot benefit from the country of origin principle because 1) it is impossible to apply the principle of mutual recognition as set out in the case law of the Court of Justice concerning the principles of freedom of movement enshrined in the EC Treaty, 2) it is an area where mutual recognition cannot be achieved due to insufficient harmonisation or 3) there are provisions laid down by existing directives which are clearly incompatible with the country of origin principle because they explicitly require supervision in the country of destination.²⁶⁵

Annex to the 2000 E-Commerce Directive (‘derogations from article 3’): As provided for in Article 3(3), Article 3(1) and (2) do not apply to:

The derogation on the choice of applicable law in contract is made to ensure that such choice can still be made despite the country of origin principle. The parties to a contract are normally free to choose which law shall govern a contract between them.²⁷⁰ This derogation along with the two following indicates that the country of origin principle may influence private international law even though article 1(4) provides that the directive does not establish additional rules on private international law. This discussion is pursued in the chapter on private law enforcement.²⁷¹

Intellectual Property Rights are taken out of the scope of this thesis, but it is important to emphasise that a substantial part of the country of origin principle is carved out by the exception for copyright,²⁷² neighbouring rights, rights referred to in directive 87/54²⁷³ and directive 96/9²⁷⁴ as well as industrial property rights (collectively denoted ‘intellectual property rights').²⁷⁵ This exception was introduced to maintain the choice of law principle, lex protectionis,²⁷⁶ for intellectual property rights.

This principle is inter alia found in the Berne Convention for the Protection of Literary and Artistic Works (Paris, 1971) article 5 which provides that authors are to enjoy, in countries of the (Berne) Union other than the country of origin, the rights which their respective laws do now or may hereafter grant to their nationals in respect of works for which they are protected under the Berne Convention. The enjoyment and the exercise of these rights shall according to article 5(2) be governed exclusively by the laws of the country where protection is claimed.

Below is a presentation and a discussion of the derogations of principal importance for this thesis.

2.5.3.3.1. Contractual Obligations in Consumer Contacts

Consumers in Europe are normally protected by mandatory legislation in the state where the consumer has his residence when the contract is entered via the Internet.²⁷⁷ This exception is introduced to maintain this protection.²⁷⁸ The directive does not provide a clear definition of what is meant by contractual obligations, but the obligations include information on the essential elements of the content of the contract, including consumer rights which have a determining influence on the decision to contract.²⁷⁹

Recital 56: 'As regards the derogation contained in this Directive regarding contractual obligations concerning contracts concluded by consumers, those obligations should be interpreted as including information on the essential elements of the content of the contract, including consumer rights which have a determining influence on the decision to contract'.

Problems may arise when information provided on a website relates both to unfair competition and to obligations in consumer contracts. Misleading statements relating to a product may for example both constitute misleading advertisement (comprised by the country of origin principle) and at the same time form part of the assessment of conform performance under a consumer contract (exempt from the country of origin principle).

Article 2(1) of the 1999 Consumer Sales Directive²⁸⁰ provides that the seller must deliver goods to the consumer which are in conformity with the contract of sale which according to article 2(2)(a) inter alia requires that the consumer goods comply with the description given by the seller. The approximation of national legislation governing the sale of consumer goods is not to impinge on provisions and principles of national law relating to contractual and non-contractual liability.²⁸¹

Article 4 and 5 of the 1997 Distance Selling Directive²⁸² prescribe a number of information requirements (administrative provisions) which must be fulfilled in connection with distance contracts between consumers and suppliers. Some of this information (for example 'the main characteristics of the goods or services') may be relevant in connection with delivery in conformity with the contract, whereas the requirements in general may influence the right of withdrawal as provided for in article 6, and which also can be said to concern contractual obligations in consumer contacts.

This conflict may be approached either by determining the nature of the cause of action (contract or outside of a contract) or by the nature of the information in question as being information on the essential elements of the content of the contract. The former approach would mean that certain information should comply with the law of both the country of origin (if enforced outside of a contract) and the country of destination (if enforced in connection with a contract).

The situation can be illustrated by the Karl Heinz Henkel case,²⁸³ which concerned jurisdiction, where a preventive action by a consumer organisation in connection to the use of unfair contract terms in consumer contracts, was found to be an action relating to tort, delict or quasi-delict.²⁸⁴ The latter approach may be supported by recital 56, cited above, and would provide that information should comply only with the legislation of one jurisdiction. Based on recital 56 and difficulties entailed in the former approach, the latter approach seem to be more operable, but there is a need for a sharper refinement of 'contractual obligation in consumer contracts'. It cannot be excluded that the nature of the cause of action, in a particular case, would have a bearing in determining the nature of the information in question.

As provided in chapter 4,²⁸⁵ the Business will have to consider the legislation of the country of destination in connection to consumer contracts. It is therefore, in lack of any clearer definition of the exception, advisable to ensure compliance in both the country of origin and country of destination in connection with marketing material which may constitute information on the essential elements of the content of the contract.

The differences in the legal systems in the Internal Market are limited, but notably not eliminated, by existing harmonisation and will be further limited when pending initiatives concerning requirements to both consumer contracts and commercial communication and practices are adopted.²⁸⁶

2.6. Goods or Services

As demonstrated above, there is a difference in the European Court of Justice's approach to measures restricting free trade in the Internal Market, depending whether it is categorised as hindering the free movement of goods or services respectively.²⁸⁷ Even though the European Court of Justice applies different approaches, the difference in fact seem to be limited. There seem to be a similar approach to dealing with restrictions and possible justification hereof whether it is based on free movement of goods or services.²⁸⁸ The analysis applied by the court is, in principle and simplified, a weighing up the effect of and reasoning behind a restricting measure against the intentions behind the fundamental freedoms in the Internal Market (proportionality). Both freedoms comprise public policy (etc.) considerations which to a proportionate extent may justify both distinctly and indistinctly applied restrictions. Both freedoms also recognise a set of mandatory requirement which may, in a proportionate manner, be invoked to justify restrictive measures. There are even examples of situations where the European Court of Justice in dealing with one of the freedoms refers to case law concerning the other freedom.²⁸⁹ The main difference between the two freedoms seems to lie in the concept of certain selling arrangements, as elaborated under the free movement of goods.

As mentioned above, national provisions restricting or prohibiting certain selling arrangements may fall outside the scope of article 28 of the EC Treaty as 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.²⁹⁰ In Alpine Invest,²⁹¹ concerning a ban on cold calling in the light of article 49 of the EC Treaty, the concept of certain selling arrangements was invoked. The European Court of Justice rejected that the prohibition in question was analogous to the above-mentioned selling arrangements, even though it was general and non-discriminatory and neither its object nor its effect was to put the national market at an advantage over providers of services from other Member States. The court maintained that the prohibition constituted a restriction on the freedom to provide cross-border services because it deprived the operators concerned of a rapid and direct technique for marketing and for contacting potential clients in other Member States.²⁹² This ruling is not a clear rejection of the possibility to apply the concept of certain selling arrangement within the area of free movement of services.²⁹³ On the other hand, the court could be much clearer if it intended to copy this concept into the area of services within the meaning of article 28 of the EC Treaty. However, certain selling arrangements may be caught by article 28 and all things being equal, it may be easier to justify a restriction under article 49 if it fulfil the requirements established in the Keck ruling on certain selling arrangements.

It follows from article 50 of the EC Treaty that the provisions on services only apply in so far as the activity is not governed by the provisions relating to freedom of movement of goods. Where a national measure restricts both the free movement of goods and the freedom to provide services, the European Court of Justice will in principle examine it in relation to only one of those two fundamental freedoms where it is shown that, in the circumstances of the case, one of them is entirely secondary in relation to the other and may be considered together with it.²⁹⁴

It may not always be obvious when to refer a restriction to either of the provisions, especially in cases concerning the distribution of advertising material, and decision must be made in the light of the specific circumstances of each particular case.²⁹⁵ In Schindler,²⁹⁶ the sending of advertisements application forms and possibly tickets was considered as only steps in the operation of a lottery (service) and could not be considered independently under article 28 of the EC Treaty. In GB-INNO-BM,²⁹⁷ advertisement (the distribution of flyers) was examined solely in the light of article 28 because consumers (in frontier areas) may travel freely to the territory of another Member State to shop (goods) under the same conditions as the local population, and that that freedom for consumers is compromised, if they are deprived of access to advertising available in the country where purchases are made.

In Herbert Karner v. Troostwijk,²⁹⁸ the court rejected to consider the marketing regulation in question in the light of article 49 because the dissemination of advertising was found to be a secondary element in relation to the sale of the goods in question. The advertisement giving rise to the case was posted in both a sales catalogue and on the Internet. The Advocate General pointed out that if advertising is seen as part of the general commercial process of selling goods, that rule must be examined exclusively from the point of view of the free movement of goods, whereas if advertising is seen as a separate activity, the question arises whether the prohibition in question is compatible with the provisions on the freedom to provide services.²⁹⁹ The Advocate General emphasised that decision must be made in the light of the specific circumstances of each particular case, and he attached importance to the fact that the advertisement was produced and published by the seller himself and thus is part of the sale of the goods in question, whereas the activity would fall within the scope of article 49 of the EC Treaty if the advertisement was produced and published by a third party, for example by an independent advertising agency.³⁰⁰

Advocate General Alber elaborated in Karner v. Troostwijk on how the national court should asses advertisements on the Internet if it would establish that the advertisement in question was placed on the Internet by a third party, including for example a parent company with an independent legal personality.³⁰¹ In that case, the national prohibition on certain advertisement would have to be examined with a view also to determining its compatibility with the freedom to provide services. The Advocate General noted that the freedom to provide services could have been restricted if the third party would be established in another Member State and it could not provide the services in question for the Austrian company Troostwijk. If the third party would also be established in Austria, the freedom to provide services could have been restricted if the advertisement could not be distributed via the Internet to other Member States where such advertisements are in principle permitted.

In Canal Satélite Digital,³⁰² it was established that it in the field of telecommunications is difficult to determine generally whether it is free movement of goods or freedom to provide services which should take priority. In the case in question the court noted that the two aspects often are intimately linked and that the supply of hardware sometimes is more important than connected services and that it in other circumstances is the economic activities of providing know-how or other services which are dominant.³⁰³ The court found that the restriction in question should be examined simultaneously in the light of both articles 28 and 49 of the EC Treaty. The court examined, apparently without distinction between the freedoms, whether the national measure pursued an objective of public interest which complied with the principle of proportionality (that is to say whether it is appropriate for securing the attainment of that objective and does not go beyond what is necessary in order to attain it).³⁰⁴

In the situations dealt with in this thesis, the Business's activities may fall under article 28 and/or article 49 depending on the underlying activity and in particular the restriction in question. Restrictions concerning the goods or services sold by the Business will fall under the respective provisions. Advertisement (i.e. the Business's website) in connection to such sales would, as a starting point, follow the nature of the product offered (goods or services), but the advertisement may also be treated as an independent service as suggested by Advocate General Alber in Karner v. Troostwijk.

2.6.1. Goods, Services and Information Society Services.

Information society services, as discussed above,³⁰⁵ are not characterises by the underlying product which is offered, but is determined by the definition, including in particular whether it is carried out online. Activities which takes place off-line are not included in the definition, and it does not concern legal requirements relating to goods or the delivery hereof. Of particular interest for this thesis is that the Business's marketing on the website and possible online delivery of services is included in the definition. This will have consequences, in particular, for the treatment of certain selling arrangements as defined by the Keck ruling. In situation where it, under the Keck-doctrine, is justified to impose national marketing rules on foreign operators' activities in that state, such marketing rules must not restrict the freedom to provide information society services within the meaning of article 3(2) of the 2000 E-Commerce Directive.

Even though a justified selling arrangement, by definition, is not a quantitative restriction or a measure having equivalent effect within the meaning of article 28 of the EC Treaty, it may none the less constitute a restriction within the meaning of the 2000 E-Commerce Directive. This is in particular true when the provision is construed in the light of article 3(1) and the overall goal of the directive which is to ensure that businesses only needs to comply with the legislation of one Member State.³⁰⁶ Restrictions may, however, be justified under the limited scope of the exception in article 3(4) of the 2000 E-Commerce Directive.

In so far as restrictions do not fall under the coordinated field or do not concern information society services, the restrictions will have to be examined under the fundamental freedoms of the EC Treaty and not under the E-Commerce Directive.

2.7. Freedom of Expression (Human Rights)³⁰⁷

It is relevant to establish whether the Business can rely on the right of freedom of expression to challenge obstacles imposed by foreign states. It is provided in article 19 of the United Nations' Universal Declaration of Human Rights³⁰⁸ that everyone has the right to freedom of opinion and expression. This right includes the freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers. The primary source of human rights in Europe is the 1950 European Convention on Human Rights.³⁰⁹

The 1950 Convention on Human Rights is ratified by Albania, Armenia, Austria, Azerbaijan, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, the Netherlands, Norway, Poland, Portugal, Romania, Russia, San Marino, Serbia and Montenegro, Slovakia, Slovenia, Spain, Sweden, the former Yugoslav Republic of Macedonia, Turkey, Ukraine and United Kingdom. The conventions is signed without ratification by Monaco and Switzerland.³¹⁰

The Convention is elaborated as a universal declaration by the Council of Europe in order to secure the universal and effective recognition and observance of human rights. These rights are, according to the preamble, the foundation of justice and peace in the world. To ensure the observance of the human rights, the contracting states have agreed to establish a permanent European Court of Human Rights.³¹¹ The analysis of human rights in this thesis is confined to the freedom of expression as provided in article 10 of the convention.

The freedom of expression constitutes one of the essential foundations of a democratic society and it covers all forms of expressions through any medium regardless of content. As provided in article 10(2) of the 1950 European Convention on Human Rights, it is possible to justify restrictions to the freedom of expression which in a proportionate manner pursues a legitimate aim. The purpose of the convention and the European Court on Human Rights is to strike a proper balance between the competing interests of the applicant, other individuals and the public as a whole in the light the media's power in modern society in order to maintain an effective political democracy.³¹² In defining the borders of freedom of expression, the purpose of the expression in question is of central importance.

Given the overall purpose of the 1950 European Convention on Human Rights, securing justice and peace through an effective political democracy with respect of human rights, it is clear that those expressions which contribute to social and political debate, criticisms and information are provided with a higher level of protection than those which concern artistic and commercial expression.³¹³

Due to the lack of a common European concept of morality, states enjoy a wider margin of appreciation to that respect,³¹⁴ since state authorities are normally in a better position to give an opinion on the exact content of these requirements as well as on the 'necessity' of a restriction or penalty intended to meet them. It is thus up to the national authorities to make the initial assessment of the reality of the pressing social need implied by the notion of 'necessity' in this context. Consequently, article 10(2) leaves, to the contracting states, a margin of appreciation. This margin is given both to the domestic legislator ('prescribed by law') and to the bodies, judicial amongst others, that are called upon to interpret and apply the laws in force.³¹⁵ However, the limits of acceptable criticism is less wide when the target is a private individual than when he or she is a political individual. The same principle applies to other public figures such as prominent businessmen, who should expect their business dealing to be subject of public debate.³¹⁶

The freedom of expression can be enjoyed regardless of which medium is used, and can thus also be relied on when providing information on the Internet. According to article 1 of the 1950 European Convention on Human Rights, the convention is imposing an obligation on the contracting parties to secure to 'everyone' within their jurisdiction the rights and freedoms defined in the convention. The convention delimits the state's access to restrict other parties' freedom of expression. The judiciary constitutes in this context part of the state, and is thus obliged to ensure the freedoms of the 1950 European Convention on Human Rights, even in disputes between private parties, and all legal or natural persons benefit from the freedom of expression.³¹⁷ This means that also businesses enjoy a freedom of, often commercial, expression and its private critics enjoy a right to express their opinions, whereas the state as such does not derive any rights from the 1950 European Convention on Human Rights. The state's freedom of expression is defined within its own democratic powers and liable under that democratic system. Unfavourable commenting by a state towards a business may constitute a restriction which can be unlawful under other international obligations subscribed to by the state, including those deriving from the legal framework of the Internal Market.

2.7.1. Justifiable Interference

The limitations set out in article 10(2) of the 1950 European Convention on Human Rights must be interpreted restrictively. According to the Court of Human Rights, the adjective 'necessary' involves, for the purposes of article 10(2), a pressing social need and, although the contracting states have a certain margin of appreciation in assessing whether such a need exists. The interference must be proportionate to the legitimate aim pursued and the reasons adduced by the national authorities to justify it must be relevant and sufficient.³¹⁸ Furthermore, the restrictions must be prescribed by legislative provisions which are worded with sufficient precision to enable interested parties to regulate their conduct, taking, if need be, appropriate advice.³¹⁹

The European Court of Human Rights summed up the major principles regarding article 10 in the case Observer and Guardian v. United Kingdom:³²⁰

(a) Freedom of expression constitutes one of the essential foundations of a democratic society; subject to article 10(2), it is applicable not only to 'information' or 'ideas' that are favourably received or regarded as inoffensive or as a matter of indifference, but also to those that offend, shock or disturb. Freedom of expression, as enshrined in article 10, is subject to a number of exceptions which, however, must be narrowly interpreted and the necessity for any restrictions must be convincingly established.

(b) These principles are of particular importance as far as the press is concerned. Whilst it must not overstep the bounds set, inter alia, in the 'interests of national security' or for 'maintaining the authority of the judiciary', it is nevertheless incumbent on it to impart information and ideas on matters of public interest. Not only does the press have the task of imparting such information and ideas: the public also has a right to receive them. Were it otherwise, the press would be unable to play its vital role of 'public watchdog'.

(c) The adjective 'necessary', within the meaning of Article 10(2), implies the existence of a 'pressing social need'. The contracting states have a certain margin of appreciation in assessing whether such a need exists, but it goes hand in hand with a European supervision, embracing both the law and the decisions applying it, even those given by independent courts. The Court is therefore empowered to give the final ruling on whether a 'restriction' is reconcilable with freedom of expression as protected by article 10.³²¹

(d) The Court's task, in exercising its supervisory jurisdiction, is not to take the place of the competent national authorities but rather to review under article 10 the decisions they delivered pursuant to their power of appreciation. This does not mean that the supervision is limited to ascertaining whether the respondent State exercised its discretion reasonably, carefully and in good faith; what the Court has to do is to look at the interference complained of in the light of the case as a whole and determine whether it was 'proportionate to the legitimate aim pursued' and whether the reasons adduced by the national authorities to justify it are 'relevant and sufficient'.

2.7.1.1. Prescribed by Law

The requirement that interference must be prescribed by legislative provision does not mean that the laws must necessarily be framed in a manner that is absolutely precise. The court has noted that this is not always the case in spheres such as that of competition, in which the situation is constantly changing in accordance with developments in the market and in the field of communication. The interpretation and application of such legislation are inevitably questions of practice. In Markt Intern Verlag,³²² the European Court of Justice established that there, in the instance in question, was consistent case law on the matter from the national court and that that case law was sufficiently clear and abundant to enable commercial operators and their advisers to regulate their conduct in the relevant sphere. The court also attached importance to the extensive commentary on the subject.³²³

2.7.1.2. Legitimate Aim

Article 10(2) mentions a number of legitimate aims: 1) the interests of national security, 2) territorial integrity or public safety, 3) the prevention of disorder or crime, 4) the protection of health or morals, 5) the protection of the reputation or rights of others, 6) preventing the disclosure of information received in confidence and 7) maintaining the authority and impartiality of the judiciary. The margin of appreciation allowed to the contracting state in restricting the freedom of expression varies, depending on the purpose and nature of the limitation and of the expression in question.³²⁴ In addition to pursuing a legitimate aim, the interference must also be proportionate ('necessary in a democratic society'). Rules of professional conduct pursue a legitimate aim for the purposes of article 10(2) and are therefore capable of justifying a restriction of advertising opportunities. The European Commission of Human Rights also takes the view that advertising may be subjected to more extensive restrictions than the expression of political ideas.³²⁵

2.7.1.3. Necessary in a Democratic Society.

The contracting states enjoy a certain margin of appreciation in assessing the need for an interference, but this margin goes hand in hand with European supervision, whose extent will vary according to the case. The supervision must be strict, because of the importance of the rights in question, and the necessity for restricting them must be convincingly established.³²⁶ The margin of appreciation is essential in commercial matters and, in particular, in an area as complex and fluctuating as that of unfair competition. The Court must confine its review to the question whether the measures taken on the national level are justifiable in principle and proportionate.³²⁷

In Markt Intern Verlag,³²⁸ the court noted that businesses inevitably expose themselves to close scrutiny of its practices by its competitors. Its commercial strategy and the manner in which it honours its commitments may give rise to criticism on the part of consumers and the specialised press. In order to carry out this task, the specialised press must be able to disclose facts which could be of interest to its readers and thereby contribute to the openness of business activities. However, even the publication of items which are true and describe real events may under certain circumstances be prohibited. The obligation to respect the privacy of others or the duty to respect the confidentiality of certain commercial information are examples hereof. It is also recognised that an isolated incident may deserve closer scrutiny before being made public, because otherwise an accurate description of one such incident can give the false impression that the incident is evidence of a general practice. The court has noted that these factors can legitimately contribute to the assessment of statements made in a commercial context, and it is primarily for the national courts to decide which statements are permissible and which are not.³²⁹

A publishing firm, run by journalists, seeking to defend the interests of smaller businesses, and its editor-in-chief was punished under the German Unfair Competition Act for dishonest competition practices for publishing an article, reporting the dissatisfaction of a consumer, who had been unable to obtain the promised reimbursement for a product purchased from an English mail order firm. The author of the article also asked for information from its readers as to the commercial practices of that firm.

Even though the contested article was addressed to a limited circle of tradespeople and did not concern, directly, the public as a whole, the court found that it conveyed information of a commercial nature which cannot be excluded from the scope of article 10.³³¹ It was also found that the applicants clearly suffered an 'interference by public authority' in the form of the injunction issued by the Federal Court of Justice restraining them from repeating the statements. Such interference infringed the convention, unless it satisfies the requirements of article 10(2) which requires that the interference must be 1) prescribed by law, 2) pursue a legitimate aims set out in that paragraph and 3) be necessary in a democratic society to achieve such aims.³³²

The court found that the case law concerning the German provision on unfair competition was sufficiently clear and abundant to enable commercial operators to regulate their conduct in the relevant sphere which satisfied the first requirement.³³³ The Court also found the legitimate aims requirement to be satisfied in that it found that the interference was intended to protect the reputation and the rights of others under article 10(2), noting that the contested article was liable to raise unjustified suspicions concerning the commercial policy of the English firm and thus damage its business.

On the necessity of the interference, the court found it primarily for the national courts to decide which statements are permissible and which are not, noting that the margin of appreciation is essential in commercial matters and, in particular, in an area as complex and fluctuating as that of unfair competition. The court noted that a business in a market economy inevitably expose itself to close scrutiny of its practices by its competitors and which may give rise to criticism on the part of consumers and the specialised press. However, even the publication of items which are true and describe real events may under certain circumstances be prohibited - the obligation to respect the privacy of others or the duty to respect the confidentiality of certain commercial information are examples. In addition, a correct statement can be and often is qualified by additional remarks, by value judgments, by suppositions or even insinuations. The court found that an isolated incident, as dealt with in this case, may deserve closer scrutiny before being made public.

2.7.2. Licensing of Broadcasting

The freedom of expression does not only apply to the content of information, but also to the means of transmission or reception, since any restriction imposed on the means necessarily interferes with the right to receive and impart information.³³⁴ The third sentence of article 10(1) provides that the freedom of expression shall not prevent states from requiring the licensing of broadcasting, television or cinema enterprises. The insertion of this sentence was due to technical and practical considerations such as the limited number of available frequencies and the major capital investment required for building transmitters. States are permitted to control by a licensing system the way in which broadcasting is organised in their territories, particularly in its technical aspects, but the licensing measures is still subject to the requirements of article 10(2).³³⁵

Interferences whose aims will be legitimate under the third sentence of article 10(1) do not necessarily have to correspond to any of the aims set out in article 10(2), but must nevertheless be assessed in the light of the other requirements of article 10(2). The grant or refusal of a licence may thus be made conditional on considerations, including such matters as the nature and objectives of a proposed station, its potential audience at national, regional or local level, the rights and needs of a specific audience and the obligations deriving from international legal instruments.³³⁶

In Lentia and Others,³³⁷ the court found that a broadcasting (radio and television) monopoly system operated in Austria was capable of contributing to the quality and balance of programmes and thus consistent with the third sentence of article 10(1). The monopoly was, however, not found to satisfy a pressing need required to justify the far-reaching character of a public monopoly.³³⁸ The court noted that, due to the technical progress made over the last decades, justification could no longer be found in considerations relating to the number of frequencies and channels available. The court emphasised that there were equivalent and yet less restrictive solutions available such as for example licence-systems, subject to specified conditions of variable content.

It was established by the European Court on Human Rights that the special characteristics of telecommunications satellites cannot justify a total ban on unauthorised reception of transmissions from telecommunications satellites.³³⁹ Such interference was not found to be 'necessary in a democratic society'. In Groppera Radio³⁴⁰ the European Court of Human Rights found that the retransmission in Switzerland of an Italian radio station's programs came under Swiss jurisdiction and that the ban on retransmission which was consistent with the Swiss local radio system, was justified in the pursuance of the protection of the international telecommunications order and the protection of the rights of others. The court noted that the interference was not a form of censorship directed against the content or tendencies of the programmes concerned, but a measure taken against a station which the authorities of the respondent state could reasonably hold to be in reality a Swiss station operating from the other side of the border in order to circumvent the statutory telecommunications system in force in Switzerland. The Court emphasised that the Swiss authorities never jammed the broadcasts from the radio station.³⁴¹

It can be discussed whether the Internet is to be considered as broadcasting within the meaning of the third sentence of article 10(1). Irrespective of the conclusion, it is clear that restrictions of the access to the Internet must be justified by a legitimate aim pursued in a proportionate manner either by article 10(1) or 10(2). Interference is a broad term which will comprise both traditional and alternative law enforcement as well as restrictions imposed on or through technical intermediaries. Since the assessment of restrictions is based on weighing up of colliding interests, it is obvious that a more general ban requires more counter-weight than a single action against a particular, unlawful activity.

States enjoy a wide margin of appreciation to hinder commercial speech. A margin of appreciation that is obviously wider than for the business and the state to hinder criticisms of the business - especially criticism which contribute towards social and political debate, criticisms and information. Criticism directed towards the Business may be restricted under the legitimate aim of protecting the reputation or rights of others (the Business) or in certain circumstances in order to prevent the disclosure of information received in confidence. Competitors must foresee a lower level of protection than for example an independent consumer organisations or the press.

The potential impact of the media in question should be considered. It was held by the court that television have a much more immediate and powerful effect than the printed word. It is unclear how the Internet should be appreciated in that context. The Internet has on the one hand a big potential in reaching the mass, but suffers on the other hand from the possibility of drowning in information. The impact of the Internet is likely to change in step with media convergence. The future media supply can probably not be appreciated in general as the television can nowadays, but it must be assessed on a case to case basis depending on the content in question and its impact in effect. The Internet is already an important medium and with no prospect of a diminishing importance in the future media supply, it must be quite difficult to justify a ban or other restrictions that affect the access to content in a more arbitrary manner.

2.7.3. Human Rights in Community Law

When dealing with the nationals of states, Community obligations must be construed with due observance of fundamental human rights.³⁴² The European Court of Justice has established that fundamental rights form an integral part of the general principles of law, the observance of which it ensures. For that purpose the court draws inspiration from both the constitutional traditions common to the Member States and from the guidelines supplied by international treaties for the protection of human rights on which the Member States have collaborated or of which they are signatories. The 1950 European Convention on Human Rights has special significance in that respect, and the Community cannot accept measures which are incompatible with observance of the human rights thus recognised and guaranteed.³⁴³ The human rights are observed by the European Court of Justice even if the subject matter falls outside the provisions on free movement of goods and services.³⁴⁴

These principles have been restated in article 6 of the Treaty establishing the European Union which provides that the Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law, principles which are common to the Member States. The Union must according to article 6(2) respect fundamental rights, as guaranteed by the 1950 European Convention on Human Rights,³⁴⁵ and as they result from the constitutional traditions common to the Member States, as general principles of Community law. It follows from article 11 of the 2000 Charter of Fundamental Rights³⁴⁶ that everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. The freedom and pluralism of the media shall be respected. It seems inevitable that the provisions of the European Convention on Human Rights will be incorporated in a possible, future Constitution for Europe.³⁴⁷ The change, if any at all, will probably be insignificant by incorporating the references to human rights into such a constitution.

In the case, Familiapress v. Heinrich Bauer Verlag,³⁴⁸ the European Court of Justice established that a prohibition on selling publications which offer the chance to take part in prize games competitions may detract from freedom of expression. The court relied on the derogation in article 10(2) of the 1950 European Convention on Human Rights for the purposes of maintaining press diversity, in so far as the measure is prescribed by law and necessary in a democratic society. The court established that it must be determined whether the prohibition is proportionate to the aim of maintaining press diversity and whether that objective might not be attained by measures less restrictive of both intra-Community trade and freedom of expression.³⁴⁹

Even though the principle of freedom of expression constitutes one of the fundamental pillars of a democratic society, it is nevertheless subject to certain limitations justified by objectives in the public interest. The discretion enjoyed by national authorities in determining the balance to be struck between freedom of expression and the public interest objectives varies for each of the goals justifying restrictions on that freedom and depends on the nature of the activities in question. For the commercial use of freedom of expression that does not contribute to a discussion of public interest, the interference must be reviewed only on its reasonableness and proportionality.

The discretion enjoyed by the Member States seems to be fairly large in the light of pursuing legitimate goals such as consumer protection and fair trading. The European Court of Justice has accepted a restriction on advertising which, irrespective of the truthfulness of the information, prohibits any reference to the fact that goods come from an insolvent estate when the goods no longer constitute part of the insolvent estate. The court found that the restriction on advertising was reasonable and proportionate in the light of the legitimate goals pursued by that provision, namely consumer protection and fair trading.³⁵⁰ The case shows that the European Court of Justice may examine national legislation's compatibility with the principle of freedom of expression as laid down in the 1950 European Convention on Human Rights, even though the legislation was considered a selling arrangement not covered by article 28 of the EC Treaty.³⁵¹

This question was also dealt with in the case Eugen Schmidberger,³⁵² concerning a demonstration carried out on the Brenner motorway by an environmental group. The demonstration had the effect that the motorway, which is an important transit route, was closed to traffic for almost 30 hours. The Austrian authorities were pursuant to Austrian legislation informed about the demonstration, but the authorities refrained from banning the action which the authorities could do if the purpose of the meeting would run counter to criminal law or the meeting would be likely to endanger public order. Schmidberger brought an action in Austria seeking damages on the basis that five of its lorries were unable to use the Brenner motorway for four consecutive days due to the demonstration and in combination with other restrictions on holiday driving. The court noted that competent national authorities are required to take adequate steps to ensure the free movement of goods in situations where the authorities are faced with restrictions on the effective exercise of a fundamental freedom which result from actions taken by individuals. The obligation exists even if those goods merely pass through Austria en route for Italy or Germany.³⁵³ The court added that that obligation is all the more important when the case concerns a major transit route such as the Brenner motorway, which is one of the main land links for trade between northern Europe and the north of Italy.³⁵⁴

The court established that the fact that the competent authorities did not ban the demonstration was capable of restricting intra-Community trade in goods and was, therefore, regarded as constituting a measure of equivalent effect to a quantitative restriction which, in principle, is incompatible with Community law obligations unless such failure to ban the activity can be objectively justified.³⁵⁵ The court emphasised in the examination of possible justification that the specific aims of the demonstration are not in themselves material in the legal proceedings since the liability is to be inferred from the fact that the national authorities did not prevent an obstacle to traffic from being placed on the Brenner motorway. Account must be taken only of the action or omission imputable to that Member State. In the present case, account should thus be taken solely of the objective pursued by the national authorities in their implicit decision to authorise or not to ban the demonstration in question.³⁵⁶ The Austrian authorities were inspired by considerations linked to respect of the fundamental rights of the demonstrators to freedom of expression and freedom of assembly, which are enshrined in and guaranteed by the 1950 European Convention on Human Rights³⁵⁷ and the Austrian Constitution.³⁵⁸

The European court of Justice noted that both the Community and its Member States are required to respect the fundamental rights enshrined in the 1950 European Convention on Human Rights which, in principle, justifies a restriction of the obligations imposed by Community law.³⁵⁹ The freedom of expression and freedom of assembly is guaranteed by articles 10 and 11 of the 1950 European Convention on Human Rights. It follows from the express wording of both articles that freedom of expression and freedom of assembly are subject to certain limitations justified by objectives in the public interest, in so far as those derogations are in accordance with the law, motivated by one or more of the legitimate aims under those provisions and necessary in a democratic society, that is to say justified by a pressing social need and, in particular, proportionate to the legitimate aim pursued.³⁶⁰ Consequently the balance between the two interests must be weighed in order to determine whether a fair balance was struck between those interests.

The court found that the national authorities in the case in question were reasonably entitled, with regards to the wide discretion which must be accorded to them in the matter, to consider that the legitimate aim of that demonstration could not be achieved in the present case by measures less restrictive of intra-Community trade.³⁶¹ Such inconvenience must be tolerated, provided that the objective pursued is essentially the public and lawful demonstration of an opinion. It was emphasised that all the alternative solutions which could be pursued would have risked reactions which would have been difficult to control and would have been liable to cause much more serious disruption to intra-Community trade and public order, such as unauthorised demonstrations, confrontation between supporters and opponents of the group organising the demonstration or acts of violence on the part of the demonstrators, who considered that the exercise of their fundamental rights had been infringed.³⁶²

The Schmidberger case concerned a single occasion of a limited geographical scope, and it was clear that the purpose was to exercise the above-mentioned fundamental rights and not to restrict trade in goods of a particular type or from a particular source. In the latter case the competent authorities did take various administrative and supporting measures in order to limit as far as possible the disruption to road traffic. The court also noted that the demonstration on the Brenner motorway did not give rise to a general climate of insecurity such as to have a dissuasive effect on intra-Community trade flows as a whole, in contrast to the serious and repeated disruptions to public order at issue in the case giving rise to the judgment in Commission v. France as dealt with below.³⁶³

2.8. Subjects to Community Obligations

Restrictions to the free movement of goods and services may be imposed by a number of players on the market, including governments, organisations competitors and private persons. In this part, it is examined to which extent community legislation may be relied on in cases between private parties (the 'horizontal direct effect' of community legislation).³⁶⁴ 'Direct effect' means in a broad sense that provisions of binding EC law which are clear, precise, and unconditional enough to be considered justiciable, can be invoked and relied on by individuals before national courts.³⁶⁵ This is relevant in this thesis in situations where a natural or legal person is imposing obstacles to the Business. Both the EC Treaty and derived, secondary community legislation may have direct effect which for the latter part is of importance in connection to the effect of the country of origin principle in the 2000 E-Commerce Directive. The discussion on the direct effect is also taken up later in this thesis³⁶⁶ in connection with the Business's access to apply measures of geographical delimitation of its activities.

2.8.1. The Direct Effect of Community Law

In Walrave and Koch,³⁶⁷ concerning a cycle organisation which required a pacemaker to be of the same nationality as the stayer, it was established that prohibition of discrimination based on nationality under EC law does not only apply to the action of public authorities, but extends likewise to rules of any other nature aimed at regulating in a collective manner gainful employment and the provision of services.³⁶⁸ The court noted that that abolition of obstacles to freedom of movement for persons and freedom to provide services would be compromised if the abolition of barriers of national origin could be neutralised by obstacles resulting from the exercise of their legal autonomy by associations or organisations which do not come under public law.

The court noted that working conditions in the various Member States are governed sometimes by means of provisions laid down by law or regulation and sometimes by agreements and other acts concluded or adopted by private persons.³⁶⁹ The court concluded that the first paragraph of article 49, in any event in so far as it refers to the abolition of any discrimination based on nationality, creates individual rights which national courts must protect.³⁷⁰ It is argued that the area of labour contracts may be treated differently than other activities, since that area of private activities normally fall outside the provisions on competition law.³⁷¹

The fact that certain provisions of the EC Treaty are formally addressed to the Member States does not prevent rights from being conferred at the same time on any individual who has an interest in the performance of the duties thus laid down.³⁷² The court has in relation to article 141³⁷³ of the EC Treaty established that the rule is mandatory in nature and that the prohibition applies not only to the action of public authorities, but extends also to agreements which are intended to regulate paid labour collectively, as well as to contracts between individuals.³⁷⁴ There is, however, nothing to preclude individuals from relying on justifications on grounds of public policy, public security or public health. Neither the scope nor the content of those grounds of justification is in any way affected by the public or private nature of the rules in question.³⁷⁵

In the Buy Irish Case,³⁷⁶ concerning the free movement of goods, it was established that the Irish government could not escape any liability from the provisions of the EC Treaty by relying on the fact that the activities was conducted by a private company. The European Court of Justice attached importance to the fact that the Irish government appointed the members of the management committee, granted it public subsidies and defined the aims and the broad outline of the campaign conducted by that institution.

The European Court of Justice has established that it is impossible in any circumstances for agreements between individuals to derogate from the mandatory provisions of the treaty on the free movement of goods.³⁷⁷ The case concerned an agreement between a Danish business (Imerco) and a British manufacturer of specially decorated china service, prohibiting the selling of substandard pieces into Denmark or other Scandinavian countries. Another Danish merchant (Dansk Supermarked) bought the substandard pieces and imported them into Denmark. The court noted that it is impossible in any circumstances for agreements between individuals to derogate from the mandatory provisions of the treaty on the free movement of goods. it follows that an agreement involving a prohibition on the importation into a Member State of goods lawfully marketed in another Member State may not be relied upon or taken into consideration in order to classify the marketing of such goods as an improper or unfair commercial practice.³⁷⁸

It seems clear that Member States cannot circumvent the obligations under the EC Treaty by conferring its powers to private bodies. Private bodies, also those without governmental support, are obliged to observe the EC Treaty's provisions on free movement of goods and services, i.e. national courts must take the provisions into consideration when dealing with private disputes. It has been argued that the national courts must be perceived as part of the machinery which applies law, and not as part of the state. The state may be liable for the judgments entered by the state's courts.³⁷⁹ It is, however, still unclear whether the EC Treaty's freedoms are fully horizontally applicable, in the sense of imposing legal obligations on all individuals and not only on powerful collective actors with powers akin to public law.³⁸⁰

It seems that both businesses and private persons are obliged to observe the provisions in contractual relations. It seems hard to find arguments supporting that this should also not be true for private persons' activities undertaken outside a contractual relationship. The private actions must still be evaluated in the light of the case law of the provisions, as discussed above. This entails that the activity must be able to hinder the free movement of goods and services and fall outside the possible justifications of such hindrance. Private parties, who impose discriminatory measures, may be more likely to be caught by the provisions. For good measure, it should be noted that businesses also may be limited under competition law which is not dealt with in this thesis.

This means in the context of this thesis that if the Business is met with sanctions, imposed by private parties from another Member State, it may invoke the freedom to provide goods and services. That is true for sanctions relating to both traditional and alternative law enforcement. As provided above,³⁸¹ private entities may rely on the freedom of expression which has to be taken into account when that freedom may apply to the imposed sanction, such as unfavourable commenting. In that context, it is likely to make a difference whether the unfavourable commenting is done by a powerful organisation rather than a private person, who may be sharing own experiences or disseminating his private opinion. Actions taken by powerful organisations are more likely to hinder the freedom to provide goods and services and less likely to rely on the freedom of expression, in particular if the measure may be characterised as a disguised restriction on trade between Member States.

2.8.1.1. Member States' Obligation to Control its Nationals

Even if the fundamental freedoms should not be fully horizontally applicable, it is clear that the obligations entailed in the cooperation between the Member States also extend to the state's control of natural and legal persons in order to achieve the goals. An obligation which is derived from article 10 of the EC Treaty, which provides that Member States shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community.

In the case Commission v. France,³⁸² the European Court of Justice established that the French Government had failed to fulfil its obligations under the EC Treaty by failing to adopt all necessary and proportionate measures in order to prevent the free movement of fruit and vegetables from being obstructed by actions by private individuals.³⁸³ The actions consisted of inter alia interception of lorries and the destruction of their loads, violence against lorry drivers, threats against French supermarkets selling agricultural products originating from other Member States, and the damaging of those goods when on display in shops in France. The European Court of Justice emphasised that the treaty principle of free movement of goods does not prohibit solely measures emanating from the state which, in themselves, create restrictions on trade between Member States. It also applies where a Member State abstains from adopting the measures required in order to deal with obstacles to the free movement of goods which are not caused by the state.³⁸⁴

The court noted that failing to adopt adequate measures to prevent obstacles to the free movement of goods that are created, in particular, by actions by private individuals on its territory is just as likely to obstruct intra-Community trade as is a positive act.³⁸⁵ In the case in question importance was attached to the fact that the activities not only affected the importation of the products, but also created a climate of insecurity which had a deterrent effect on trade flows as a whole.³⁸⁶ The court recognised that Member States enjoy a margin of discretion in determining what measures are most appropriate to eliminate barriers to the importation of products in a given situation, and that it is not for the Community institutions to prescribe for them the measures which they must adopt and effectively apply in order to safeguard the free movement of goods on their territories. The court emphasised that it falls to the court to verify, in cases brought before it, whether the Member State concerned has adopted appropriate measures for ensuring the free movement of goods.³⁸⁷

Similarly in Schmidberger,³⁸⁸ the court established that the fact that the competent authorities of a Member State did not ban a demonstration which resulted in the complete closure of a major transit route such as the Brenner motorway for almost 30 hours, is capable of restricting intra-Community trade in goods and must, therefore, be regarded as constituting a measure of equivalent effect to a quantitative restriction which is, in principle, incompatible with the Community law obligations arising from the EC Treaty unless that failure to ban can be objectively justified.

The fact that the Austrian authorities did not ban the demonstration was, however, not under the circumstances found to be incompatible with the free movement of goods.³⁸⁹ Even though the purpose of the demonstration was to draw attention to the threat to the environment and public health, these aims was not in themselves material in the legal proceedings which sought to establish the liability of a Member State in respect of an alleged breach of Community law, since that liability is to be inferred from the fact that the national authorities did not prevent an obstacle to traffic from being placed on the Brenner motorway.³⁹⁰ The question to deal with was solely whether the objective pursued by the national authorities in their implicit decision to authorise or not to ban the demonstration in question.

This decision was made upon considerations linked to respect of the fundamental rights of the demonstrators to freedom of expression and freedom of assembly as enshrined in the 1950 European Convention on Human Rights. The court attached importance to the fact that both the Community and its Member States are required to respect fundamental rights, the protection of those rights is a legitimate interest which, in principle, justifies a restriction of the obligations imposed by Community law, even under a fundamental freedom guaranteed by the EC Treaty such as the free movement of goods.³⁹¹

So even though Member States enjoy a margin of appreciation in its exercise of public powers, it is clear that severely insufficient governance is likely to constitute a breach of the fundamental freedoms of the EC Treaty. However, as showed in Schmidberger even deliberate failure to intervene may be justified under for example human rights considerations as dealt with above. It has been argued that a single solution as to the proper personal scope of the free movement of rules is to be based on convincing argumentation, and will obviously lie beyond certain dogmatic positions that can be traced in both case law and doctrine.³⁹²

2.8.2. The Direct Effect of the Country of Origin Principle

It is provided in article 249 of the EC Treaty that 'a directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods'. In Marshall v. Southampton,³⁹³ the European Court of Justice concluded with reference to article 249 that the binding nature of a directive exists only in relation to 'each Member State to which it is addressed' and that a directive may not, of itself, impose obligations on an individual and that a provision of a directive may not be relied upon as such against such a person.³⁹⁴ In the case in question direct effect was allowed by maintaining a broad concept of a state which also comprised a (public) health authority as the defendant in this case. The court noted that a person who is able to rely on a directive against the state may do so regardless of the capacity in which the state is acting (whether employer or public authority). In either case, it is necessary to prevent the state from taking advantage of its own failure to comply with Community law.³⁹⁵

The rejection of horizontal direct effect has later been maintained in for example Dori v. Recreb,³⁹⁶ which concerned a consumer's possibility of relying against a trader on the right of cancellation provided in directive 85/577,³⁹⁷ which was not duly transposed. The court noted that the effect of extending that case law to the sphere of relations between individuals would be to recognise a power in the Community to enact obligations for individuals with immediate effect, whereas it has competence to do so only where it is empowered to adopt regulations.³⁹⁸ In the absence of measures transposing the directive within the prescribed time-limit, consumers cannot derive from the directive itself a right of cancellation as against traders with whom they have concluded a contract or enforce such a right in a national court.³⁹⁹

2.8.2.1. Indirect Effect

Directives may entail an 'indirect effect',⁴⁰⁰ which means that national courts are required to interpret their national law in the light of the wording and the purpose of a directive. In the von Colson case⁴⁰¹ such obligation was derived from article 10 of the EC Treaty which provides that Member States shall take all appropriate measures to ensure fulfilment of community obligations. The court found that article 10 is binding on all the authorities of Member States including, for matters within their jurisdiction, the courts.⁴⁰² Although Member States are free to choose between different solutions suitable for achieving the directive's objective, it is nevertheless required that if a Member State chooses to penalise breaches of prohibition by the award of compensation, then in order to ensure that it is effective and that it has a deterrent effect, it must be adequate in relation to the damage sustained.⁴⁰³

The von Colson principle was refined in Kolpinghuis Nijmegen,⁴⁰⁴ where the court established that the obligation to refer to the content of a directive when interpreting national law is limited by the general principles of law which form part of Community law and in particular the principles of legal certainty and non-retroactivity. The court emphasised that a directive cannot have the effect of determining or aggravating the liability in criminal law of persons who act in contravention of the provisions of that directive.

In the Marleasing case,⁴⁰⁵ the European Court of Justice established that national courts are required to interpret national law, as far as possible, in the light of the wording and the purpose of directives in order to achieve the result pursued by the latter and thereby comply with the third paragraph of article 249 of the EC Treaty - no matter whether the national provision is adopted before or after the directive. In this case, the European Court of Justice precluded the national court from interpreting national law in such a manner that the nullity of a public limited company may be ordered on grounds other than those exhaustively listed in the unimplemented directive in question.⁴⁰⁶

In Océano Grupo v. Quintero,⁴⁰⁷ the European Court of Justice decided in a case concerning an unfair jurisdiction clause in a consumer contract that the Spanish court should interpret national law, as far as possible, in accordance with the 1993 Directive on Unfair Contract Terms,⁴⁰⁸ and to favour the interpretation that would allow the court to decline of its own motion the jurisdiction conferred on it by virtue of an unfair term. All the facts giving rise to this case postdated the expiry of the period allowed for transposing the mentioned directive. Even though the court only obliged the directive provisions to be applied to the extent possible, it did not refrain from encouraging indirect effect of a directive in a civil dispute.

The situation was summed up by the Advocate General Jaqcobs in Centrosteel v. Adipol:⁴⁰⁹ 'In summary, I am of the opinion that the Court's case law establishes two rules: 1) a directive cannot of itself impose obligations on individuals in the absence of proper implementation in national law; 2) the national courts must nevertheless interpret national law, as far as possible, in the light of the wording and purpose of relevant directives. While that process of interpretation cannot, of itself and independently of a national law implementing the directive, have the effect of determining or aggravating criminal liability, it may well lead to the imposition upon an individual of civil liability or a civil obligation which would not otherwise have existed'.⁴¹⁰

It should for good measure be mentioned that if the result prescribed by a directive cannot be achieved by way of interpretation, Community law requires the Member States to make good damage caused to individuals through failure to transpose a directive, provided that three conditions are fulfilled. First, the purpose of the directive must be to grant rights to individuals. Second, it must be possible to identify the content of those rights on the basis of the provisions of the directive. Finally, there must be a causal link between the breach of the State's obligation and the damage suffered.⁴¹¹ Member States' liability for not transposing directives is not further dealt with in this thesis.

2.8.2.2. Incidental Horizontal Effect

The European Court of Justice has despite the ruling in Marshall v. Southampton,⁴¹² which established that 'a directive cannot of itself impose obligations on an individual and cannot therefore be relied upon as such against an individual', occasionally attached horizontal direct effect to directives. The case law has been described as complex, confusing and difficult to distinguish, in convincing conceptual terms, from direct horizontal effect.⁴¹³

CIA Security v. Signalson and Securitel⁴¹⁴ concerned Belgian legislation requiring security systems to be approved under a specific procedure before being marketed. CIA Security sued two competing, foreign companies claiming unfair trading practices for failing to comply with the Belgian procedure. The Belgian procedure was not notified to the EU Commission in accordance with the required procedure in directive 83/189.⁴¹⁵ The European Court of Justice found that the directive lay down a precise obligation on Member States to notify draft technical regulations to the Commission before they are adopted. Being, accordingly, unconditional and sufficiently precise in terms of their content, those articles could be relied on by individuals before national courts.⁴¹⁶ The court concluded that the directive was to be interpreted as meaning that breach of the obligation to notify renders the technical regulations concerned inapplicable, so that they are unenforceable against individuals and that national courts must decline to apply a national technical regulation which has not been notified in accordance with the directive.⁴¹⁷

The court attached importance to the fact that the directive was designed to preventively protect the free movement of goods and serves a useful purpose by only permitting obstacles which are necessary to satisfy compelling public interest requirements. The court noted that the aim of the directive is not simply to inform the Commission, but 1) to eliminate or restrict obstacles to trade, 2) to inform other Member States of technical regulations, 3) to give the Commission and the other Member States time to react and to propose amendments and 4) to afford the Commission time to propose a harmonising directive.⁴¹⁸

Unilever v. Central Food⁴¹⁹ concerned the direct effect of the directive⁴²⁰ dealt with in CIA Security v. Signalson and Securitel. This case concerned an Italian law on the labelling of origin of olive oil. The Commission was informed of the law, in accordance with the mentioned directive, but the Commission informed the Italian authorities of its intention to legislate in the field covered by the draft law and called on them to postpone the adoption, as provided for in directive 83/189. Unilever brought proceedings against Central Food concerning payment by Central Food for a consignment of olive oil supplied by Unilever.

The question concerned the direct effect between two private parties of the obligation to postpone adoption of the Italian labelling requirements. The European Court of Justice concluded that a national court is required, in civil proceedings between individuals concerning contractual rights and obligations, to refuse to apply a national technical regulation which was adopted during a period of postponement of adoption prescribed in directive 83/189. Building upon the reasoning in CIA Security v. Signalson and Securitel, the court noted that in the civil proceedings in question, the Italian rules were liable to hinder Unilever in marketing the extra virgin olive oil which it offers for sale.

The court emphasised that the finding of inapplicability as a legal consequence of breach of the obligation of notification in CIA Security v. Signalson and Securitel was made in connection with proceedings between competing undertakings based on national provisions prohibiting unfair trading. The court found no reason to treat disputes between individuals relating to unfair competition, as in CIA Security v. Signalson and Securitel, differently from disputes between individuals concerning contractual rights and obligations, as in the main proceedings.⁴²¹

The court recognised the Marshall/Dori doctrine, but emphasised that that case law does not apply to this directive, where non-compliance which constitutes a substantial procedural defect, renders a technical regulation adopted in breach of either of those articles inapplicable. In such circumstances, and unlike the case of non-transposition of directives, with which the Marhsall and Dori concerned, directive 83/189 does not in any way define the substantive scope of the legal rule on the basis of which the national court must decide the case before it. It creates neither rights nor obligations for individuals.⁴²² Directives can thus be directly invoked in proceedings against other individuals only in circumstances where they do not of themselves impose an obligation on a private party.⁴²³

2.8.2.3. The Country of Origin Principle

The country of origin principle in the 2000 E-Commerce Directive cannot of itself impose obligations on an individual or be relied upon against an individual. This is also emphasised by imposing obligations on 'Member States' in articles 3(1) and 3(2). For the Business, the country of origin principle provides an obligation to comply with the legislation in the country of origin and a right to provide information society services unhindered to other Member States. The country of origin principle in the 2000 E-Commerce Directive does not share the same procedural characteristic as the directive mentioned above⁴²⁴ under incidental horizontal effect.

The country of origin principle could come into play between private parties if the Business is met with private cross-border law enforcement, either traditional or alternative law enforcement. In traditional law enforcement, the national court, before which the case is pending, would be obliged to apply the national provisions implementing the directive. If the directive is not correctly implemented, the national court would be obliged to construct national law in the light of the directive as provided for above. In connection to alternative law enforcement, the Member States will have an obligation, according to article 10 of the EC Treaty to take all appropriate measures to ensure fulfilment of the obligations arising out of the EC Treaty. But it should be emphasised that Member States enjoy a quite wide margin of appreciation in its exercise of public powers.⁴²⁵

2.9. Conclusion

Activities carried out on the Internet are, as a starting point, subject to the same rules and principles as for commerce carried out via other media. This includes in particular the fundamental freedoms in the Internal Market to provide goods and services respectively. As regards those freedoms, there are a number of similarities which in general pursue the goal of removing obstacles to free trade within the Internal Market. Both within goods and services, obstacles may be justified to pursue mandatory requirements subject to a proportionality test, and provided the area is not harmonised in the Internal Market. The test applied is basically a weighing up of the magnitude and (justifiable) reasons behind the obstacle in question compared to the overall goal of ensuring the free movement of goods and services.

There is only a limited amount of case law concerning Internet activities and the fundamental freedoms. It seems clear that the Internet as a medium will play an important role in realising the goals of the Internal Market, and that restrictions on for example online marketing may require better arguments than restrictions on more local media. It should be noted that both the Gambelli case and the DocMorris case concerned sensitive areas (gambling and medicinal products respectively), where states may have a relatively well-founded interest in enforcing strict regulation.

The country of origin principle in the 2000 E-Commerce Directive adds another test of justification on top of the above-mentioned freedoms. Even though there is no case law on the 2000 E-Commerce Directive and uncertainties as to the scope and in particular the general exception, it is clear that the country of origin principle will impose stricter conditions to justify obstacles to in particular online marketing, sale and delivery. The country of origin principle does not apply to goods as such, but it does apply also to 'certain selling arrangements' insofar and to the extent the obstacle is restricting the free movement of information society services.

The 1950 Convention on Human Rights provides a freedom of expression which may also be relied on by businesses. This freedom, as interpreted by the European Court of Human Rights, leaves a wide margin of appreciation when it comes to regulate (by law) the commercial freedom of speech, insofar such regulation is necessary in a democratic society and pursues a legitimate aim, including regulating professional conduct. It is clear that advertising may be subject to more extensive restrictions than for example the expression of political ideas or providing news which are important in a democratic society.

If human rights were not a part of the test applied by the European Court of Justice to justify restriction to cross-border trade, it would still be quite unlikely that a restriction which would be justified under the strict exceptions of the free movement of goods and services, would constitute an interference which would violate a business freedom to advertise itself or its ordinary products.

It should be borne in mind that the 1950 Convention on Human Rights is ratified by a number of states which are not part of the Internal Market. If the Business would is met with restrictions from those states, it is likely that the freedom of expression could be invoked against such restriction - especially in cases where the restriction is applied in a discriminatory way, and where it consequently must be difficult to prove the necessity of such interference (only against foreign businesses).

The freedoms in the EC Treaty does not only apply to activities carried out by public authorities. The Buy Irish case shows that a government cannot escape liability from the provisions of the EC Treaty by relying on the fact that activities are conducted by a private company, when those activities are in fact supported by the government. When it comes to discriminatory actions carried out by private parties, the court seems to go quite far in the direction of attaching direct effect to the fundamental freedoms, especially in situations where measures are taken by powerful (private) organisations. It is, however, still uncertain to what extent the fundamental freedoms are fully horizontally applicable, insofar as that it can be applied to actions taken by competitors or private persons.

Even if the fundamental freedoms are not fully horizontally applicable, the implementation of the country of origin principle in the 2000 E-Commerce Directive will be when properly implemented. Even if the directive is not properly implemented, national law has to be constructed, as far as possible, in the light of the directive and if it is not possible to construct national legislation in accordance with the directive, the Member State may be liable to pay damages to the aggrieved party. Member States are obliged to ensure that its nationals are not hampering the aims of the fundamental freedoms. The state has a quite far margin of appreciation in determining what measures are most appropriate and it is not for the Community institutions to prescribe which measures they must adopt and effectively apply. It falls, however, to the European Court of Justice to verify whether a state has adopted necessary and proportionate measures.

3See in general Cassese, Antonio, International Law, Second Edition, Oxford University Press, 2005, p. 46ff and Brownlie, Ian, Principles of Public International Law, Sixth Edition, Oxford University Press, 2003, p. 287ff. See also on jurisdiction in international law Akehurst, Michael, Jurisdiction in International Law, The British Year Book of International Law 1972-73, University Press, Oxford, p. 145.

5Article 12 of the EC Treaty provides that within the scope of application of the treaty, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited. See Craig, Paul and Búrca, Gráinne de, EU Law, third edition, Oxford University Press, 2003, p. 387 with references.

8For an introduction to the establishment and function of the European Union see for example Craig, Paul and Búrca, Gráinne de, EU Law, third edition, Oxford University Press, 2003, p. 3 ff. and Hartley, T. C., European Community Law, fifth edition, Oxford University Press, 2003, p. 3 ff.

16See Declaration (No. 53) by Denmark on article 42 (ex Article K.14) of the Treaty on European Union and Decision of the Heads of State or Government, meeting within the European Council at Edinburgh on 12 December 1992, concerning certain problems raised by Denmark on the Treaty on European Union, Conclusions of the Presidency, Part B, OJ C 348, 31.12.1992, p. 1. See also protocol to the Amsterdam Treaty on the position of Denmark, article 2.

21Agreement on the European Economic Area, May 1992 as amended by the Adjusting Protocol and subsequently by the EEA Enlargement Agreement (OJ L 130, 29 April 2004, p. 3 and EEA Supplement No 23, 29 April 2004, p. 1). The EEA Agreement entered into force on 1 January 1994.

27Commission interpretative communication on facilitating the access of products to the markets of other Member States: the practical application of mutual recognition, (2003/C 265/02), p. 9 with references.

35See Commission of the European Communities v. French Republic, Case 21/84 (9 May 1985), paragraph 13. See also Commission of the European Communities v. Kingdom of Denmark, Case 192/01 (23 September 2003), paragraphs 40 and 41.

39Criminal proceedings against Oosthoek's Uitgeversmaatschappij BV. Case 286/81 (15 December 1982), paragraph 15. The case concerned a national prohibition on the use of free gifts as sales promotion which, however, was found to be justified on the grounds of consumer protection.

52This assumes, inter alia, that the newspapers offering the chance of winning a prize in games, puzzles or competitions are in competition with small newspaper publishers who are deemed to be unable to offer comparable prizes and the prospect of winning is liable to bring about a shift in demand.

62Deutscher Apothekerverband eV and 0800 DocMorris NV, Jacques Waterval, Case 322/01 (11 December 2003). See also Lang, Richard, Case C-322/01, Deutscher Apothekerverband eV v. 0800 DocMorris NV and Jacques Waterval, judgment of the Full Court of 11 December 2003, Court of Justice Common Market Law Review 42 (2005), p. 189–204.

64Deutscher Apothekerverband eV and 0800 DocMorris NV, Jacques Waterval, Case 322/01 (11 December 2003), paragraph 59. See also paragraph 61, where the defendants in the main proceedings argued that the prohibition, in conjunction with rules of professional conduct, makes it virtually impossible for pharmacies established in other Member States to gain access to the German market of end consumers of medicinal products.

71Herbert Karner Industrie-Auktionen GmbH v. Troostwijk GmbH, Case 71/02 (25 March 2004). See also Stuyck, Jules, Case C-71/02, Herbert Karner Industrie-Auktionen GmbH v. Troostwijk GmbH, Judgment of the Fifth Chamber of 25 March 2004, Court of Justice Common Market Law Review 41 (2004), p. 1683–1700.

80See Barnard, Catherine, The Substantive Law of the EU - The Four Freedoms, Oxford, 2004, p. 92ff. and 128 with reference to now expired directive 70/50 (22 December 1969) on the abolition of measures which have an effect equivalent to quantitative restrictions on imports.

81Craig, Paul and Búrca, Gráinne de, EU Law, third edition, Oxford University Press, 2003, p. 626. See also Henri Cullet and Chambre syndicale des réparateurs automobiles et détaillants de produits pétroliers v. Centre Leclerc à Toulouse and Centre Leclerc à Saint-Orens-de-Gameville, Case 231/83 (29 January 1985).

82Oberkreisdirektor des Kreises, Borken and Vertreter des öffentlichen Interesses beim Oberverwaltungsgericht für das Land Nordrhein-Westfalen v. Handelsonderneming Moormann BV. Case 190/87 (20 September 1988), paragraph 10 with references. See also Barnard, Catherine, The Substantive Law of the EU - The Four Freedoms, Oxford, 2004, p. 64f.

88See Craig, Paul and Búrca, Gráinne de, EU Law, third edition, Oxford University Press, 2003, p. 634f. with references and Barnard, Catherine, The Substantive Law of the EU - The Four Freedoms, Oxford, 2004, p. 65.

99Henri Cullet and Chambre syndicale des réparateurs automobiles et détaillants de produits pétroliers v. Centre Leclerc à Toulouse and Centre Leclerc à Saint-Orens-de-Gameville, Case 231/83 (29 January 1985).

108Commission of the European Communities v. Kingdom of Denmark. Case 192/01 (23 September 2003). See also judgment of the EFTA Court of 5 April 2001 in Case E-3/00 EFTA Surveillance Authority v. Norway (EFTA Court Report 2000/01, p. 73).

119Musik-Vertrieb membran GmbH et K-tel International v. GEMA - Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte, Joined Cases 55/80 and 57/80 (20 January 1981), paragraphs 10 and 15.

122Foreningen af danske Videogramdistributører, acting for Egmont Film A/S, Buena Vista Home Entertainment A/S, Scanbox Danmark A/S, Metronome Video A/S, Polygram Records A/S, Nordisk Film Video A/S, Irish Video A/S and Warner Home Video Inc v. Laserdisken, Case 61/97 (22 September 1998), paragraph 18.

125Regina v. Maurice Donald Henn and John Frederick Ernest Darby, Case 34/79 (14 December 1979), paragraph 21. See also Commission of the European Communities v. United Kingdom of Great Britain and Northern Ireland, Case 40/82 (31 January 1984).

129Aragonesa de Publicidad Exterior SA and Publivía SAE v. Departamento de Sanidad y Seguridad Social de la Generalitat de Cataluña, Joined Cases 1/90 and 176/90 (25 July 1991), paragraphs 17 and 18.

130Aragonesa de Publicidad Exterior SA and Publivía SAE v. Departamento de Sanidad y Seguridad Social de la Generalitat de Cataluña, Joined Cases 1/90 and 176/90 (25 July 1991), paragraphs 17 and 18.

131Also referred to as 'imperative requirements', or 'overriding requirements in the public interest'. See Barnard, Catherine, The Substantive Law of the EU - The Four Freedoms, Oxford, 2004, p. 108 with references.

133Barnard, Catherine, The Substantive Law of the EU - The Four Freedoms, Oxford, 2004, p. 117f. with reference to Criminal proceedings against Ditlev Bluhme, Case 67/97 (3 December 1998). See for a similar opinion Craig, Paul and Búrca, Gráinne de, EU Law, third edition, Oxford University Press, 2003, p. 668.

139See opinion of Mr Advocate General Darmon delivered on 15 September 1992. Schutzverband gegen Unwesen in der Wirtschaft e.V. v. Yves Rocher GmbH. Prohibition of advertising using price comparisons, Case 126/91, paragraph 52.

140Communication from the Commission concerning the consequences of the judgment given by the Court of Justice on 20 February 1979 in case 120/78 ('Cassis de Dijon'). Official Journal C256 (3 October 1980), p. 2f.

142See in general Barnard, Catherine, The Substantive Law of the EU - The Four Freedoms, Oxford, 2004, p. 110ff. with references and Green Paper on European Union Consumer Protection, COM(2001) 531 (2 October 2001), p. 3ff. on consumer protection in the Internal Market.

153Barnard, Catherine, The Substantive Law of the EU - The Four Freedoms, Oxford, 2004, p. 117f. with reference to Criminal proceedings against Ditlev Bluhme, Case 67/97 (3 December 1998). See for a similar opinion Craig, Paul and Búrca, Gráinne de, EU Law, Third Edition, Oxford University Press, 2003, p. 668.

156Bond van Adverteerders and others v. The Netherlands State, Case 352/85 (26 April 1988), paragraph 16. See also Craig, Paul and Búrca, Gráinne de, EU Law, third edition, Oxford University Press, 2003, p. 806ff.

169Piergiorgio Gambelli and Others, Case 243/01 (6 November 2003), paragraph 55 with reference to Eurowings Luftverkehrs AG v. Finanzamt Dortmund-Unna, Case 294/97 (26 October 1999), paragraphs 33 and 34 and to Graziana Luisi and Giuseppe Carbone v. Ministero del Tesoro, Joined Cases 286/82 and 26/83 (31 January 1984), paragraph 16.

171The court noted that the Member State from which the unsolicited telephone call is made is best placed to regulate the canvassing of potential clients who are in another Member State, it cannot be complained that the former Member State does not leave that task to the Member State of the recipient.

182Stichting Collectieve Antennevoorziening Gouda and others v. Commissariaat voor de Media, Case 288/89 (25 July 1991), paragraph 11 with reference to Bond van Adverteerders and others v. The Netherlands State, Case 352/85 (26 April 1988), paragraphs 32 and 34.

187Criminal proceedings against Jean-Claude Arblade and Arblade & Fils SARL and Bernard Leloup, Serge Leloup and Sofrage SARL, Joined Cases 369/96 and 376/96 (23 November 1999), paragraph 35 with references.

193Vereinigte Familiapress Zeitungsverlags- und vertriebs GmbH v. Heinrich Bauer Verlag, Case 368/95 (26 June 1997), paragraph 22 and Her Majesty's Customs and Excise v. Gerhart Schindler and Jörg Schindler, Case 275/92 (24 March 1994), paragraphs 50, 51 and 60 of Schindler

196The UK Company was carrying on business as a bookmaker under a licence granted pursuant to UK legislation and was subject to rigorous controls in relation to the legality of its activities. See Piergiorgio Gambelli and Others, Case 243/01 (6 November 2003), paragraph 12.

207Proposal for a directive of the European Parliament and of the Council on services in the internal market, COM(2004) 2 final/3 (5 March 2004), 2004/0001 (COD). See also Working document of the Luxembourg Presidency, containing clarifications to the Commission's proposal; Proposal for a Directive of the European Parliament and of the Council on services in the internal market, 2004/2001 (COD) (10 January 2005).

209Article 4(1). According to page 19 of the proposal, the definition covers a very wide range of activities including, for example, management consultancy, certification and testing, maintenance, facilities management and security, advertising services, recruitment services, including the services of temporary employment agencies, services provided by commercial agents, legal or tax consultancy, property services, such as those provided by estate agencies, construction services, architectural services, distributive trades, organisation of trade fairs and exhibitions, car-hire, security services, tourist services, including travel agencies and tourist guides, audiovisual services, sports centres and amusement parks, leisure services, health services and personal domestic services, such as assistance for old people.

211EU Directive 2000/31 (8 June 2000) on Certain Legal Aspects of Information Society Services, in Particular Electronic Commerce, in the Internal Market (Directive on Electronic Commerce). See also proposal for a European Parliament and Council directive on certain legal aspects of electronic commerce in the internal market, COM(1998) 586 final, 18 November 1998, 98/0325 (COD). Adopted by the EU Parliament on 4 May 2000 (see A5-0106/2000).

213Directive 1999/93 (13 December 1999) on a Community framework for electronic signatures and Directive 2000/46 (18 September 2000) on the taking up, pursuit of and prudential supervision of the business of electronic money institutions respectively.

214Directive 98/34 (22 June 1998) laying down a procedure for the provision of information in the field of technical standards and regulations. Directive 98/48 (20 July 1998) amending Directive 98/34 laying down a procedure for the provision of information in the field of technical standards and regulations.

226Directive 89/552 (3 October 1989) on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities (1989 EU Television Without Frontier Directive). Point (a) of article 1 defines 'television broadcasting' as ‘the initial transmission by wire or over the air, including that by satellite, in unencoded or encoded form, of television programmes intended for reception by the public. It includes the communication of programmes between undertakings with a view to their being relayed to the public. It does not include communication services providing items of information or other messages on individual demand such as telecopying, electronic data banks and other similar services’.

231Directive 95/46 (24 October 1995) on the protection of individuals with regard to the processing of personal data and on the free movement of such data and directive 02/58 (12 July 2002) concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications).

233The area is under review in the work that was launched by the Commission Communication 'Electronic commerce and indirect taxation'. See proposal for a European Parliament and Council directive on certain legal aspects of electronic commerce in the internal market, COM(1998) 586 (18 November 1998), 98/0325 (COD), p. 32.

241Herbert Karner Industrie-Auktionen GmbH v. Troostwijk GmbH, Opinion of Mr Advocate General Alber delivered on 8 April 2003, Case 71/02, paragraph 98 with reference to the ruling in Konsumentombudsmannen against De Agostini (Svenska) Förlag AB, Case 34/95 (9 July 1997, joined with cases 35/95 and 36/95, Konsumentombudsmannen against TV-Shop i Sverige AB).

242Member States may according to article 2(2) provisionally suspend retransmissions of television broadcasts if (all of) the following conditions are fulfilled: (a) a television broadcast coming from another Member State manifestly, seriously and gravely infringes Article 22; (b) during the previous 12 months, the broadcaster has infringed the same provision on at least two prior occasions; (c) the Member State concerned has notified the broadcaster and the Commission in writing of the alleged infringements and of its intention to restrict retransmission should any such infringement occur again; (d) consultations with the transmitting State and the Commission have not produced an amicable settlement within 15 days of the notification provided for in point (c), and the alleged infringement persists.

252Communication from the Commission to the council, the European Parliament and the European Central Bank on application to financial services of article 3(4) to (6) of the electronic commerce directive. COM (2003) 259, p. 2f.

253Communication from the Commission to the council, the European Parliament and the European Central Bank on application to financial services of article 3(4) to (6) of the electronic commerce directive. COM (2003) 259, p. 5.

254According to article 3(6) shall the Commission shall examine the compatibility of the notified measures with Community law in the shortest possible time and if necessary ask the EU Member State in question to refrain from taking any proposed measures or urgently to put an end to the measures in question. This examination and the Commissions conclusion is without prejudice to the state’s possibility of proceeding with the measures in question.

255According to article 3(5) the measure in the case of urgency shall be communicated, along with indication of reasons for the urgency, in the shortest possible time to the Commission and to the EU member state, where the service provider is established.

262Konsumentombudsmannen against De Agostini (Svenska) Förlag AB, Case 34/95 (9 July 1997, joined with cases 35/95 and 36/95, Konsumentombudsmannen against TV-Shop i Sverige AB), paragraphs 32 and 33.

263Konsumentombudsmannen against De Agostini (Svenska) Förlag AB, Case 34/95 (9 July 1997, joined with cases 35/95 and 36/95, Konsumentombudsmannen against TV-Shop i Sverige AB), paragraphs 57 and 62.

266Article 8(1) of Directive 2000/46 (18 September 2000) on the taking up, pursuit of and prudential supervision of the business of electronic money institutions allow the competent authorities of an EU member state to under certain circumstances waive the application of some or all of the provisions of that directive and the application of Directive 2000/12 (20 March 2000) relating to the taking up and pursuit of the business of credit institutions. This article provides an exceptions to the already established system for providing banking services in the internal market (see for example Ttitle III). This exception in the 2000 E-Commerce Directive is introduced to maintain this exception in the 2000 Directive on Electronic Money.

267Article 44(2) of Directive 85/611 (20 December 1985) on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) is exempt from the country of origin principle in order to avoid a conflict between the country of origin principle and the country of destination principle in the mentioned directive. Article 44(2) gives that undertakings for collective investment in transferable securities (UCITS) may advertise its units in the EU member state in which they are marketed. It must comply with the provisions governing advertising in that State.

268A number of articles concerning insurance are exempt from the scope of the country of origin principle. This exception is introduced to avoid conflict with the already established system for providing insurance services in the internal market.

269This exception concerns the formal validity of contracts creating or transferring rights in real estate where such contracts are subject to mandatory formal requirements of the law of the Member State where the real estate is situated. This exception is introduced to avoid conflict with the choice of law principle, which gives that the law of the place where the subject matter of rights in real estate is situated is to apply (lex rei sitae).

275The 2000 E-Commerce Directive fails to provide a definition of intellectual property rights. This exception is of great importance for the problem dealt with under this thesis, it falls outside the scope of this paper to provide a clear definition of this exception. The scope of copyright and related rights seem to be relatively well defined as well as the definitions in the explicitly mentioned directives. Industrial property rights may give rise to uncertainty especially on the borders of marketing law (unfair competition) and the use trade secrets. In the systematic applied at the World Intellectual Property Organisation (WIPO), industrial property is sub-divided into inventions (patents), trademarks, industrial designs and geographic indications.

276See in general Eechoud, Mireille van, Conflict of Laws in Copyright and Related Rights. Alternatives to the Lex Protectionis, Information Law Series 12, Den Haag: Kluwer Law International 2003.

2782000 E-Commerce Directive, recital 55 gives that this directive does not affect the law applicable to contractual obligations relating to consumer contracts; accordingly, this Directive cannot have the result of depriving the consumer of the protection afforded to him by the mandatory rules relating to contractual obligations of the law of the Member State in which he has his habitual residence.

286See especially directive 93/13 (5 April 1993) on unfair terms in consumer contracts, directive 97/7 (20 May 1997) on the protection of consumers in respect of distance contracts and directive 2002/65 (23 September 2002) concerning the distance marketing of consumer financial services and amending directive 90/619 and directives 97/7 and 98/27. Directive 87/102 (22 December 1986) on the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit and proposal for a directive on the harmonisation of the laws, regulations and administrative provisions of the Member States concerning credit for consumers, COM(2002) 443 (11 September 2002). See also Communication from the Commission on European Contract Law and the revision of the acquis, COM(2004) 651 (11 October 2004). Directive 84/450 (10 September 1984) concerning misleading and comparative advertising and directive 05/29 (11 May 2005) concerning unfair business-to-consumer commercial practices in the internal market and amending directive 84/450, directives 97/7, 98/27 and 2002/65 and regulation 2006/2004 ('Unfair Commercial Practices Directive').

287See in general Stuyck, Jules, Case C-71/02, Herbert Karner Industrie-Auktionen GmbH v. Troostwijk GmbH, judgment of the Fifth Chamber of 25 March 2004, Court of Justice Common Market Law Review 41 (2004), p. 1683–1700, at p. 1690ff.

289See for example Schutzverband gegen unlauteren Wettbewerb v. TK-Heimdienst Sass GmbH, Case 254/98 (13 January 2000), paragraph 29. See also Barnard, Catherine, The Substantive Law of the EU - The Four Freedoms, Oxford, 2004, p. 371 with reference to Konsumentombudsmannen (KO) v. Gourmet International Products AB (GIP), Case 405/98 (8 March 2001), paragraph 21.

293It could be argued that it was considered a restriction because it concerned a total ban. See to that end Herbert Karner Industrie-Auktionen GmbH v. Troostwijk GmbH, Case 71/02 (25 March 2004), paragraphs 40 to 42 with reference to paragraph 37 of the Keck and Mithouard ruling presented above.

317See European Court of Human Rights Autronic AG v. Switzerland (22 May 1990), Paragraph 47: 'In the Court's view, neither Autronic AG's legal status as a limited company nor the fact that its activities were commercial nor the intrinsic nature of freedom of expression can deprive Autronic AG of the protection of Article 10 (art. 10). The Article (art. 10) applies to "everyone", whether natural or legal persons. The Court has, moreover, already held on three occasions that it is applicable to profit-making corporate bodies...'.

338Paragraph 39: '... Of all the means of ensuring that these values are respected, a public monopoly is the one which imposes the greatest restrictions on the freedom of expression, namely the total impossibility of broadcasting otherwise than through a national station and, in some cases, to a very limited extent through a local cable station...'.

343Elliniki Radiophonia Tiléorassi AE and Panellinia Omospondia Syllogon Prossopikou v. Dimotiki Etairia Pliroforissis and Sotirios Kouvelas and Nicolaos Avdellas and others, Case 260/89 (18 June 1991), paragraph 41.

344Stuyck, Jules, Case C-71/02, Herbert Karner Industrie-Auktionen GmbH v. Troostwijk GmbH, judgment of the Fifth Chamber of 25 March 2004, Court of Justice Common Market Law Review 41 (2004), p. 1683–1700, at p. 1683 and 1695ff. It should be mentioned that the case concerned an area partially harmonised by Community law.

346Charter of Fundamental Rights of the European Union (2000/C 364/01). See also Commission Communication on the Charter of Fundamental Rights of the European Union, COM(2000) 559 final (13 September 2000).

349Vereinigte Familiapress Zeitungsverlags- und vertriebs GmbH v. Heinrich Bauer Verlag, Case 368/95 (26 June 1997), paragraph 26 and 27 with reference to judgment of the European Court of Human Rights, Informationsverein Lentia and Others v. Austria (24 November 1993).

363Eugen Schmidberger, Internationale Transporte und Planzüge v. Republik Österreich, Case 112/00 (12 June 2003), paragraphs 84 to 89. See Commission of the European Communities v. French Republic, Case 265/95 (9 December 1997) as dealt with under 2.8.1.1.

364See in general Cruz, Julio Baquero, Free Movement and Private Autonomy, European Law Review, volume 24, no. 6, December 1999, p. 603 and Cruz, Julio Baquero, Between Competition and Free Movement, Hart Publishing, 2002, p. 105ff.

367B.N.O. Walrave and L.J.N. Koch v. Association Union cycliste internationale, Koninklijke Nederlandsche Wielren Unie et Federación Española Ciclismo, Case 36/74 (12 December 1974). See also J. C. J. Wouters, J. W. Savelbergh and Price Waterhouse Belastingadviseurs BV v. Algemene Raad van de Nederlandse Orde van Advocaten, intervener: Raad van de Balies van de Europese Gemeenschap, Case 309/99 (19 February 2002), paragraph 120 with references.

368B.N.O. Walrave and L.J.N. Koch v. Association Union cycliste internationale, Koninklijke Nederlandsche Wielren Unie et Federación Española Ciclismo, Case 36/74 (12 December 1974), paragraph 17.

369B.N.O. Walrave and L.J.N. Koch v. Association Union cycliste internationale, Koninklijke Nederlandsche Wielren Unie et Federación Española Ciclismo, Case 36/74 (12 December 1974), paragraphs 18 and 19.

370B.N.O. Walrave and L.J.N. Koch v. Association Union cycliste internationale, Koninklijke Nederlandsche Wielren Unie et Federación Española Ciclismo, Case 36/74 (12 December 1974), paragraph 34.

374Gabrielle Defrenne v. Société anonyme belge de navigation aérienne Sabena, Case 43/75 (8 April 1976), paragraph 39. See also Roman Angonese v. Cassa di Risparmio di Bolzano SpA, Case 281/98 (6 June 2000), paragraph 34.

375Union royale belge des sociétés de football association ASBL v. Jean-Marc Bosman, Royal club liégeois SA v. Jean-Marc Bosman and others and Union des associations européennes de football (UEFA) v. Jean-Marc Bosman, Case 415/93 (15 December 1995), paragraph 86.

393M. H. Marshall v. Southampton and South-West Hampshire Area Health Authority (Teaching), Case 152/84 (26 February 1986). For a discussion on the reasoning see Craig, Paul and Bùrca, Gràinne de, EU Law, third edition, Oxford University Press, 2003, p. 206ff.

415Directive 83/189 (28 March 1983) laying down a procedure for the provision of information in the field of technical standards and regulations (OJ 1983 L 109, p. 8), as amended by Directive 88/182 (22 March 1988).

420Directive 83/189 (28 March 1983) laying down a procedure for the provision of information in the field of technical standards and regulations, as amended by Directive 94/10 (23 March 1994) materially amending for the second time Directive 83/189.

2. The Internal Market