EU law, Sunday trading restrictions …and the Charter?

By Thomas Horsley

For almost 25 years, retailers have sought, without much success, to invoke Union law in an effort to liberalise Member State restrictions on shop opening hours. The Pelckmans judgment, delivered by the Court of Justice (First Chamber) on 8 May 2014, marks a new stage of development in a long line of case law. In that decision, the CJEU was requested to review, for the first time, the compatibility of Belgian legislation prohibiting seven-day retail trading with provisions of the EU Charter of Fundamental Rights. The Court’s response on the Charter is unremarkable. Nevertheless, Pelckmans remains an interesting case. That decision refreshes an important statement of principle in EU internal market law: non-discriminatory rules on retail trading hours fall outside the scope of the Treaty. More significantly, it reminds us that the legal framework governing the outer limits of the Treaty freedoms remains fragmented – a structural feature that the Court arguably maintains to its own advantage.

Facts

 The facts of the case are straightforward. Pelckmans Turnhout NV, a Belgian garden centre operator, objected to its competitors’ refusal to adhere to national legislation requiring retailers to observe one day of closure per week. The defendants, Walter Van Gastel Balen NV and others, argued in their defence that the Belgian obligation was contrary to EU law. They persuaded the Belgian Constitutional Court to make a preliminary reference to the Court of Justice on that point. First, the CJEU was requested to determine whether the contested Belgian legislation was contrary to the principles of equality and non-discrimination set out in Articles 20 and 21 of the Charter. Secondly, the CJEU was asked to consider the Belgian measure’s compatibility with the Treaty provisions on the free movement of goods and services (Articles 34, 35 and 56 TFEU).

 Judgment of the Court

 The Court of Justice declined jurisdiction to answer the questions referred by the Belgian Court. It concluded, without considering it necessary to request the Opinion of the Advocate General, that nothing in the order for reference established a connecting factor with Union law. Crucially, the absence of any such factor ruled out the application of the Charter to review the Belgian rules on shop opening hours:

 ‘Where a legal situation does not come within the scope of EU law, the Court does not have jurisdiction to rule on it and any provisions of the Charter relied upon cannot, of themselves, form the basis for such jurisdiction’  (para. 20)

 The Court also declined jurisdiction to review the Belgian restrictions on retail trading hours on the basis of the Treaty provisions on the free movement of goods and services. The CJEU observed that, on a number of occasions, it had already concluded that Articles 34, 35 and 56 TFEU do not apply to national rules such as those at issue in the order for reference (paras 24 and 25).

 The defendants’ arguments clearly did not fare well before the Court. On that basis alone, it might be tempting to conclude that the judgment raises little of note. Yet, that conclusion would be premature.

 Looking past what’s new

 At first glance, the standout feature of Pelckmans is thedefendants’ attempt to engage the Charter as a means to review Member State restrictions on shop trading hours. That argument had not previously been tested before the Court. Nevertheless, novel as it may be, that addition to an already established line of jurisprudence on retail trading restrictions is the least remarkable aspect of the judgment. The Court’s response on the Charter is predictable and, most importantly, does not test emerging principles governing that instrument’s scope of application. The First Chamber’s reasoning in Pelckmans closely follows the parameters set by the Grand Chamber in previous rulings, principally: Case C-617/10 Fransson – analysed in earlier posts on this Blog (1)(2).

 The Court’s assessment of the Treaty provisions on goods and services is the more significant aspect of Pelckmans. First and foremost, that assessment refreshes an important statement of principle: non-discriminatory rules on retail trading hours fall outside the scope of the Treaty per se (see earlier e.g. Joined Cases C-69/93 and C-258/93 Punto Casa). That conclusion carves out an important space for Member States to assert national policy preferences within a functioning European internal market. It also sends a clear message to potential litigants: if you wish to contest such rules, turn to national not Union law.

 However, it is the reasoning behind the decision, rather than the result itself, that deserves further consideration. Pelckmans serves as a clear reminder that the legal framework governing the outer limits of the Treaty freedoms remains fragmented – a structural feature that the Court arguably maintains to its own advantage.

 Pelckmans and Keck – Parts of a Coherent Framework?

 Pelckmans does not alter the basis of the Court’s assessment of Member State rules imposing restrictions on retail trading hours. With respect to the free movement of goods, the Court reiterated that:

 ‘Art 34 TFEU… [does] not apply to national rules concerning the closure of shops that are enforceable against all economic operators pursuing activities within the national territory and that affect, in the same way, in law and fact, the sale of domestic products and of products from other Member States’ (Pelckmans, para. 24)

 Readers of this Blog will no doubt immediately note direct parallels between the CJEU’s reasoning on measures restricting shop opening hours (above) and the substance of its landmark 1993 Keck ruling. In Keck, as is well known, the Court famously introduced the ‘selling arrangement’ concept in response to growing criticism regarding the scope of Article 34 TFEU. It ruled that:

 ‘[The] application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements is not such as to hinder directly or indirectly, actually or potentially, trade between Member States within the meaning of the Dassonville judgment (Case 8/74 [1974] ECR 837), 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’ (Keck, para. 16) (emphasis added).

 ‘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 [34] of the Treaty’ (Keck, para. 17) (emphasis added).

The fact that the CJEU makes no express reference to its Keck ruling – and the ‘selling arrangement’ concept in particular – in Pelckmans might strike readers as surprising. Isn’t the Court’s reasoning the same in both sets of decisions? Why no express link?

 In practice, the Court rarely refers to Keck outside its factual parameters. Indeed, it has proved extremely reluctant to decouple the ‘selling arrangement’ from its facts and recast that concept as a general principle of EU free movement law. Instead, the CJEU prefers to deploy other judicial devices alongside the ‘selling arrangement’ to manage the outer limits of the Treaty provisions on intra-EU movement. The principal complementary devices are (1) the criterion of ‘insignificant’ effects and (2) the concept of ‘effects too uncertain and indirect.’ What is remarkable is that these additional devices are consistently applied alongside the ‘selling arrangement’ to exclude from the scope of the Treaty freedoms non-discriminatory national measures with comparable effects on intra-EU movement. Regretfully, the Court is yet to articulate that point expressly. It simply applies the three distinct judicial rules without detailed reflection – often in parallel. For instance, in Pelckmans the Court invoked the criterion of ‘effects too uncertain and indirect’ in order to reaffirm, in parallel with its assessment on goods, the exclusion of non-discriminatory national rules on shop trading hours from the scope of Article 56 TFEU on services (Pelckmans, para. 25).

 There is nothing new in questioning the function of, and relationship between, the ‘selling arrangement’, the ‘insignificant’ effects criterion, and the concept of effects ‘too uncertain and indirect’ as limits on the scope of the Treaty freedoms. Nevertheless, that issue still warrants close attention. This is all the more so given the Court’s decision, on occasion, to break with the substance of all three judicial devices in order to scrutinise Member State measures with comparable effects on intra-EU trade (e.g. Case C-367/98 Commission v. Portugal (Golden Shares)and Case C-110/05 Commission v Italy (Trailers)). How can such decisions be rationalised with the continued application of the ‘selling arrangement’, the ‘insignificant’ effects criterion, and the concept of effects ‘too uncertain and indirect’? More fundamentally, why should certain non-discriminatory national measures, including rules on shop trading hours, fall outside the scope of the Treaty per se but not others if their effects on intra-EU trade are the same? Put another way: why respect Member State autonomy fully in some policy fields but not others?

 At present, the Court is arguably having its cake and eating it when it comes to delimiting the outer limits of the Treaty freedoms. On the one hand, it relies on the ‘selling arrangement’, the criterion of ‘insignificant’ effects, and the concept of effects ‘too uncertain and indirect’ to place certain non-discriminatory Member State measure beyond review against the Treaty freedoms. On the other hand, however, it also exploits the lack of conceptual coherence across those same three devices – in conjunction with creative application of the ‘market access’ principle – to retain considerable influence over other non-discriminatory national rules. Some may defend the Court’s approach as flexible and responsive to the dynamic process of market integration. Whilst that may be true, it does leave the Member States somewhat in the dark with respect to the outer limits of EU free movement law.

 Conclusion

 Pelckmans will not excite those anticipating the next leap in the Court’s jurisprudence on the scope the Charter. Similarly, that judgment does not change the outcome or nature of the CJEU’s assessment of national rules on shop opening hours. Nevertheless, Pelckmans does prompt us to reflect afresh on some important open questions concerning the outer limits of EU free movement law and the Court’s particular role in setting those boundaries. That debate will likely continue long after Belgian garden centres close for the day.

2 comments

  1. Wladyslaw

    One thing I wonder about: If the reasoning in Pelckmans is similair to the one in Keck (to which I agree), why then in Karner the Keck-like connection with EU law was enough to considder it falling within the socpe of EU law and hence to apply EU fundamental rights while in Pelckmans it was not? In both cases there was no derogation as the measures by memebr states did not contitute a restriction.

  2. Pingback: Academic – EU Law @ Liverpool

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