Keck and mithourd

The case of Keck and Mithouard regarded two men by the names Keck and Mithouard, managers of supermarkets at Mundolsheim and Geispolsheim, which were prosecuted in France for selling zp1.264 bottles of “Picon” beer and 544 kilograms of “Sati Rouge” coffee at prices below those which they had purchased them. Resale at loss was prohibited under French law, but the law in question did on the other hand not ban sale at loss by manufacturers. Keck and Mithouard argued that the law was contrary to Community law concerning free movement of goods, persons services and capital and the principles of free competition within the Community.
The case was referred to the ECJ in June 1991 by the Tribunal de Grande Instance, Strasbourg. The national court referred two questions to the ECJ:
Is the prohibition in France of resale at loss under Article 32 of Order 86-1243 of 1 December 1986 compatible with the principles of the free movement of goods, services and capital, free competition in the Common Market and non- discrimination on grounds of nationality laid down in the Treaty of 25 March 1957 establishing the EEC, and more particularly in Articles 3 and 7 thereof, since the French legislation is liable to distort competition: (a) firstly, because it makes only resale at loss an offence and exempts from the scope of the prohibition the manufacturer, who is free to sell on the market the product which he manufactures, processes or improves, even very slightly, at a price lower than his cost price; (b) secondly, in that it distorts competition, especially in frontier zones between the various traders on the basis of their nationality and place of establishment?
As can be seen the questions were not exactly clear and precise but the ECJ took them under consideration anyhow.
It was clear that even if the purpose of the prohibition was to ensure fairness of commercial transaction it was evident that it could impede imports in two particular ways, firstly by prohibiting resale at loss which is one of the techniques used when launching new products onto the market and secondly because an importer might be in competition with French manufacturers who can sell directly on the market.32
The Advocate General in this case, Mr Van Gerven, had given an opinion in the first Sunday trading case. There he had proposed that the ECJ should adopt a more reserved approach towards national rules which were not intended to regulate intra-Community trade, by declaring Article 28 only applicable to rules of this type if they had the effect of screening or partitioning the market. The ECJ did not follow his opinion in that case, so he assumed that in this case the Court would adhere to the broad Dassonville-formula. Then he stated that he thought that the ECJ owed a duty to the national courts to make this quite
clear to avoid confusion. He took under consideration the latest Sunday Trading case, Stoke-on-Trent and Norwich City Council v. B & Q,, where the ECJ had stated that when it was being decided if a measure should fall prima facie within the scope of Article 28, and had a proportionate effect on intra-Community trade, it had to be assessed according to whether that effect was direct, indirect or purely speculative, suggesting that even a measure which had only a speculative effect on trade might fall within the prohibition. Mr. Van Gerven made the conclusion that the ECJ had thereby chosen not to restrict the scope of Article 28, but instead it would regulate its application by using the doctrine of mandatory requirements and proportionality.
He applied this approach to the legislation in Keck but discovered a complication. Where the prohibition on resale extended to circumstances which did not invoke a need for consumer protection it could not been said that that it pursued an object justified with respect to Community law. There the concept of proportionality did therefore not become relevant. He concluded therefore that the rules were caught by Article 28 whatever the assessments of proportionality were. But nevertheless Mr. Van Gerven concluded that in this case the measure would not fall inside the scope of Article 28. In his conclusion he said that in the context of the reference for a preliminary ruling, the ECJ should give the national court all the information which it needs in order to decide the case before it, but that information only. It would therefore be sufficient to tell the national court that a statutory prohibition of resale at a loss was not incompatible with Article 28 since the events at issue occurred at the retail level, a level in respect of which a recognized ground of justification might be invoked for the rules in question and that at that level there was no more than a purely hypothetical effect on trade between Member States and certainly no more than an hypothetical hindering of trade flows.
The ECJ decided not to follow the Advocate General opinion in this case and introduced instead a whole new approach.
The ECJ began by citing the Dassonville-formula. Then it stated that the purpose of this legislation was not to regulate trade in goods between Member States. The ECJ said that although such a legislation might restrict the volume of sales, and hence the sale of products from other Member States, it was still a question if such a possibility was sufficient to characterize this legislation as a measure having equivalent effect to a quantitative restriction on imports.
Then the ECJ made a rather strange comment on why it felt necessary to change its approach to such cases. It said that because of increasing tendency of traders to invoke Article 28 EC to challenge rules whose effect was to limit their commercial freedom even where such rules were not aimed at products from other Member states it found it necessary to re-examine and clarify its case law on this matter.33
33 With this comment it seemed like the ECJ was blaming over-ambitious traders for creating the problems in applying Article 28. The fact was of course that the ECJ had itself created