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First, it is submitted that they conflict with article 34 of the Treaty on the Functioning of the European Union (TFEU), providing that: Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between member states. Ratio |
It is accepted that the proposed minimum pricing is a measure which would have equivalent effect to a quantitative restriction on imports, in that it will have an effect on, for example, actual or potential wine or beer imports from a number of other EU States. Ratio |
The respondents response is reliance on article 36 TFEU, providing: The provisions of articles 34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of the protection of health and life of humans Such prohibitions or restrictions shall not, however, const... |
The second limb concerns wine only, and arises from Regulation (EU) No 1308/2013 (the Single CMO Regulation) establishing a common organisation of markets in agricultural products including wine. Ratio |
The objectives of the common agricultural policy (CAP) as set out in article 39 TFEU, include increasing agricultural productivity, stabilising markets, assuring the availability of supplies and ensuring that supplies reach consumers at reasonable prices. Ratio |
Common market organisations (CMOs) are based on the concept of an open market to which every producer has free access under conditions of effective competition: so the Court of Justice said in its judgment in this case at para 22. Ratio |
The Advocate General and Court of Justice both also accepted that a member state may adopt measures pursuing the objective of protection of human life and health, although they undermine the system, on which the Single CMO Regulation is founded, of free formation of prices in conditions of effective competition: paras ... |
But the petitioners submit that this involves a different exercise to that arising under articles 34 and 36, in particular a different and potentially more onerous weighing of the proportionality of the measure. Ratio |
The Court of Justices judgment FAC |
Both limbs have to be examined on the basis of the guidance given by the Court of Justice. Ratio |
The Advocate General was clear in his advice. ARG |
He took first the position under the Single CMO Regulation. ARG |
He said: 44. ARG |
I consider that the existence of a CMO covering the wine sector does not prevent the national authorities from taking action in the exercise of their competence in order to adopt measures to protect health and, in particular, to combat alcohol abuse. ARG |
However, where the national measure constitutes a breach of the principle of the free formation of selling prices that constitutes a component of the single CMO Regulation, the principle of proportionality requires that the national measure must actually meet the objective of the protection of human health and must not... |
45. ARG |
As the commission suggests, I consider that the examination of the proportionality of the measure must be undertaken in the context of the analysis that must be carried out by reference to article 36 TFEU. ARG |
46. ARG |
Consequently, I propose that the answer to the first question should be that the single CMO Regulation must be interpreted as meaning that it does not preclude national rules, such as those at issue, which prescribe a minimum retail price for wines according to the quantity of alcohol in the product sold, provided that... |
Turning to articles 34 and 36, he noted that the proposed minimum pricing appeared to be contrary to article 34, on which basis the next step was to consider whether this was justified under article 36. ARG |
As to this, he said: 71. ARG |
A barrier to the free movement of goods may be justified on one of the public interest grounds set out in article 36 TFEU or in order to meet overriding requirements. ARG |
In either case, the restrictions imposed by the member states must none the less satisfy the conditions laid down in the courts case law as regards their proportionality. ARG |
72. ARG |
In that regard, in order for national rules to comply with the principle of proportionality, it is necessary to ascertain not only whether the means which they implement are appropriate to ensure attainment of the objective pursued, but also that those means do not go beyond what is necessary to attain that objective: ... |
73. ARG |
Although the words generally used by the court seem most frequently to result in only two different stages of the control of proportionality being distinguished, the intellectual exercise followed in order to determine whether a national measure is proportionate is generally broken down into three successive stages. AR... |
74. ARG |
The first stage, corresponding to the test of suitability or appropriateness, consists in ascertaining that the act adopted is suitable for attaining the aim sought. ARG |
75. ARG |
The second stage, relating to the test of necessity, sometimes also known as the minimum interference test, entails a comparison between the national measure at issue and the alternative solutions that would allow the same objective as that pursued by the national measure to be attained but would impose fewer restricti... |
76. ARG |
The third stage, corresponding to the test of proportionality in the strict sense, assumes the balancing of the interests involved. ARG |
More precisely, it consists in comparing the extent of the interference which the national measure causes to the freedom under consideration and the contribution which that measure could secure for the protection of the objective pursued. ARG |
He went on to make the important point that judicial review of the proportionality of the measure should be marked by a certain degree of restraint (para 82). ARG |
This was for two reasons: 83. ARG |
First, account should be taken of the fact that it is for the member states to decide on the degree of protection which they wish to afford to public health and on the way in which that degree of protection is to be achieved. ARG |
Since the level of protection may vary from one member state to another, member states must be allowed discretion in that area That discretion is necessarily represented by a certain relaxation of control, representing the national courts concern not to substitute its own assessment for that of the national authorities... |
84. ARG |
Second, it is necessary to take into account the complexity of the assessments to be carried out and the degree of uncertainty which exists as to the effects of measures such as those at issue. ARG |
He added that a third relevant consideration in the present case was the provision for a re-evaluation and report by the Scottish Ministers after five years, coupled with the provision for automatic termination after six years unless otherwise ordered and affirmed by the Scottish Parliament (para 85). ARG |
However, he added this caution: 86. ARG |
[T]he discretion left to the member states cannot have the effect of allowing them to render the principle of free movement of goods devoid of substance. ARG |
In so far as article 36 TFEU includes an exception to that principle, it is for the national authorities, even where they have a discretion, to show that the measure satisfies the principle of proportionality. ARG |
87. ARG |
Furthermore, whatever the extent of that discretion, the fact none the less remains that the reasons that may be invoked by a member state by way of justification must be accompanied by an analysis of the suitability and proportionality of the restrictive measure adopted by that state and of the precise evidence on whi... |
The Court of Justice did not either repeat or endorse the Advocate Generals above advice, but spoke in terms which give some room for argument, both as to the relationship between the principles applicable to the two limbs of the petitioners case, and as to the nature of any proportionality exercise which it envisaged ... |
Addressing the significance of the Single CMO Regulation, the Court (in its paras 28 and 29) adhered firmly to what Advocate General Bot had described (in his para 73: see para 6 above) as its previous general usage, distinguishing only two different stages of the proportionality test. Ratio |
The difficulty this raises is to know what, if any, scope there is for a more general third stage proportionality question, of the nature described by Advocate General Bot in his paras 76 and 82 to 84: see paras 6 and 7 above). Ratio |
The Courts guidance in this respect is oblique, as appears from the last sentence of para 28 and from the summary in para 29 of its judgment. Ratio |
No doubt deliberately, the Court there suggests that the third stage, rather than involving any independent balancing of interests, can be subsumed within the second stage, that is consideration of what is necessary to achieve the desired protection of human life and health. Ratio |
The material parts of paras 28 and 29 of the Courts judgment read as follows: 28. Ratio |
A restrictive measure such as that provided for by the national legislation at issue must, however, satisfy the conditions set out in the courts case law with respect to proportionality, that is, the measure must be appropriate for attaining the objective pursued, and must not go beyond what is necessary to attain that... |
It must be observed that, in any event, the issue of proportionality must be examined by taking into consideration, in particular, the objectives of the CAP and the proper functioning of the CMO, which necessitates that those objectives be weighed against the objective pursued by that legislation, namely the protection... |
29. Ratio |
Consequently, the answer to the first question is that the Single CMO Regulation must be interpreted as not precluding a national measure, such as that at issue, which imposes an MUP for the retail selling of wines, provided that that measure is in fact an appropriate means of securing the objective of the protection o... |
Turning to articles 34 and 36 TFEU, the Court was satisfied that the proposed minimum pricing regime appeared to be an appropriate means of attaining the objective it pursued (identified as increasing the price of cheap alcoholic drinks, so reducing the consumption of alcohol, in general, and the hazardous and harmful ... |
It went on (para 40): As regards whether that national legislation does not go beyond what is necessary in order effectively to protect human life and health, it must be borne in mind that, in this case, that analysis must be undertaken, as stated in para 28 of this judgment, with regard to the objectives of the CAP an... |
However, given the issue to be examined in this case, that analysis will have to be undertaken with reference to proportionality in the context of article 36 TFEU and will therefore not have to be carried out separately. Ratio |
Again, this appears to subsume any third stage within the context of the second stage enquiry relating to necessity. Ratio |
It also indicates that the requirement, in that context, to refer to the objectives of the CAP and the proper functioning of the CMO adds nothing to the criteria which fall to be taken into account when deciding whether article 36 is satisfied. Ratio |
The petitioners case, that there is some important difference between the exercise to be undertaken under articles 34 and 36 and the exercise to be undertaken in relation to wine in the light of the Single CMO Regulation does not appear consistent with the Court of Justices guidance. Ratio |
The remaining paragraphs of the Court of Justices judgment are also noticeable for their focus on the issue now before the Supreme Court in terms of the first and second stages of the proportionality test which Advocate General Bot described. Ratio |
The Court thus stated: 53. FAC |
[I]t is for the national authorities to demonstrate that that legislation is consistent with the principle of proportionality, that is to say, that it is necessary in order to achieve the declared objective, and that that objective could not be achieved by prohibitions or restrictions that are less extensive, or that a... |
54. FAC |
In that regard, the reasons which may be invoked by a member state by way of justification must be accompanied by appropriate evidence or by an analysis of the appropriateness and proportionality of the restrictive measure adopted by that state, and specific evidence substantiating its arguments 55. FAC |
It must however be stated that that burden of proof cannot extend to creating the requirement that, where the competent national authorities adopt national legislation imposing a measure such as the MUP, they must prove, positively, that no other conceivable measure could enable the legitimate objective pursued to be a... |
56. FAC |
In that context, it is for the national court called on to review the legality of the national legislation concerned to determine the relevance of the evidence adduced by the competent national authorities in order to determine whether that legislation is compatible with the principle of proportionality. FAC |
On the basis of that evidence, that court must, in particular, examine objectively whether it may reasonably be concluded from the evidence submitted by the member state concerned that the means chosen are appropriate for the attainment of the objectives pursued and whether it is possible to attain those objectives by ... |
57. FAC |
In this case, in the course of such a review, the referring court may take into consideration the possible existence of scientific uncertainty as to the actual and specific effects on the consumption of alcohol of a measure such as the MUP for the purposes of attaining the objective pursued. FAC |
As Advocate General Bot stated in point 85 of his opinion, the fact that the national legislation provides that the setting of an MUP will expire six years after the entry into force of the 2013 Order, unless the Scottish Parliament decides that it is to continue, is a factor that the referring court may also take into... |
58. FAC |
That court must also assess the nature and scale of the restriction on the free movement of goods resulting from a measure such as the MUP, by comparison with other possible measures which are less disruptive of trade within the European Union, and the effect of such a measure on the proper functioning of the CMO, that... |
59. FAC |
It follows from the foregoing that article 36 TFEU must be interpreted as meaning that, where a national court examines national legislation in the light of the justification relating to the protection of the health and life of humans, under that article, it is bound to examine objectively whether it may reasonably be ... |
Paragraph 59 was in substance repeated as para 3 of the Courts ruling. Ratio |
Paragraph 59 echoes the two-stage approach to proportionality stated in para 56. Ratio |
The explanation that the court is bound to or must examine objectively whether it may reasonably be concluded from the evidence submitted that the means are appropriate and cannot be attained by less restrictive measures can be seen as recognising the fact that the national court is a reviewing body, not the primary de... |
Paragraph 57, with its reference back to para 85 of the Advocate Generals opinion, enables the reviewing court to bear in mind the uncertainties and experimental nature of the proposed minimum pricing system. Ratio |
Paragraph 58 might be read as suggesting a third stage proportionality issue. Ratio |
But the injunction to assess the nature and scale of the restriction is in terms only in order to compare them with the effects of other possible measures, and so to determine whether there are other measures less destructive of EU trade. Ratio |
Once it is accepted, as found here by the Lord Ordinary, that an approach based on increased taxation would be less destructive of EU trade, para 58 is on the face of it exhausted. Ratio |
The Court of Justices approach to exceptions (such as article 36) to a general principle (such as article 34) gives rise, in these circumstances, to some difficulty. Ratio |
The first two stages of the proportionality exercise address, respectively, the legitimacy of the aim which the legislature had in mind, and the necessity for the measures adopted if such aim is to be achieved (or, putting the latter aspect the other way round, the question whether the aim could be achieved by less ext... |
Neither in terms nor in logic is either stage concerned with the further question whether, on an overall balance, it is worthwhile to achieve the aim, bearing in mind the detriment that achieving it would necessarily cause to the general principle. Ratio |
By suppressing Advocate General Bots third stage, one may surmise that the Court of Justice intended at the very least to signal the appropriateness of an even greater level of restraint and respect for national authorities choice of measures to protect health than that which Advocate General Bot himself recognised und... |
Yet one may also infer from the Court of Justices references in paras 28, 29 and 40 that it intended more general objectives (in particular, those of the CAP and the CMO) to play some role, at least in relation to wine, and perhaps also other commodities. Ratio |
What is unclear is quite what that role might be, and how it really fits within the second stage enquiry into which the Court of Justice has inserted it. Ratio |
As it happens, the Supreme Court touched on the Court of Justices reticence about any third stage enquiry in a judgment given some six months prior to the Court of Justices present judgment: R (Lumsdon) v Legal Services Board [2015] UKSC 41; [2016] AC 697. PRE |
In a joint judgment by Lord Reed and Lord Toulson, it said (para 33): 33. PRE |
Proportionality as a general principle of EU law involves a consideration of two questions: first, whether the measure in question is suitable or appropriate to achieve the objective pursued; and secondly, whether the measure is necessary to achieve that objective, or whether it could be attained by a less onerous meth... |
There is some debate as to whether there is a third question, sometimes referred to as proportionality stricto sensu: namely, whether the burden imposed by the measure is disproportionate to the benefits secured. PRE |
In practice, the court usually omits this question from its formulation of the proportionality principle. PRE |
Where the question has been argued, however, the court has often included it in its formulation and addressed it separately, as in R v Minister for Agriculture, Fisheries and Food, Ex p Fedesa (Case C-331/88) [1990] ECR I-4023. PRE |
The Supreme Courts approach thus corresponded closely with Advocate General Bots approach. PRE |
But this does not help now to explain the Court of Justices evidently deliberate suppression of the third stage in the present case, coupled with the insertion of one aspect of it in the limited context of the second stage test of necessity. PRE |
I will have to consider how far this is significant on this appeal at a later stage in this judgment. PRE |
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