In its judgment in Case C-531/07 Fachverband der Buch- und Medienwirtschaft v. LIBRO Handelsgesellschaft mbH the Court of Justice held that a prohibition on importers of German-language books from fixing a price below the retail price fixed or recommended by the publisher in the State of publication constitutes a restriction on the free movement of goods which cannot be justified.
Austrian legislation contained provisions on the obligation to sell German-language books at a fixed price. In particular, the legislation provided that the publisher or importer is to fix and publish a retail price and the importer is not to fix a price below the retail price fixed or recommended by the publisher for the State of publication, less any value added tax comprised in it. Moreover, the legislation granted the Austrian Fachverband der Buch- und Medienwirtschaft (trade association of the chamber of commerce for the book and media trade) the power to publish the retail prices to which the booksellers are subject for the sale in Austria of German-language books.
That did not suit a big book retailer in Austria, LIBRO, which advertised books published in Germany for sale in Austria at prices below the minimum set for Austria on the basis of German prices.
The Fachverband sued LIBRO and sought an injunction from the competent Austrian court directing LIBRO to cease such advertising.
The Austrian court wondered whether the legislation was contrary to Article 28 EC and referred the matter to the Court of Justice.
The Court of Justice answered in the affirmative.
It recalled 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 to be measures having equivalent effect to quantitative restrictions for the purposes of Article 28 EC (Case 8/74 Dassonville, paragraph 5).
The Court went on to examine whether the Austrian legislation concerned a "selling arrangement". It held that the application to products from other member States of national provisions restricting or prohibiting certain selling arrangements is not such as to constitute such a hindrance, on condition that those provisions apply to all relevant traders operating within the national territory and that 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 (see Joined Cases C-267/91 and C-268/91 Keck and Mithouard, paragraphs 16 and 17, and Case C-110/05 Commission v Italy, paragraph 36, see here for our post on that important judgment).
But, the Court held, the Austrian legislation, by prohibiting Austrian importers of German-language books from fixing a retail price below that fixed or recommended by the publisher for the State of publication, less any VAT comprised in it, provides for a less favourable treatment for imported books since it prevents Austrian importers and foreign publishers from fixing minimum retail prices according to the conditions of the import market, whereas the Austrian publishers are free to fix themselves, for their goods, such minimum retail prices for the national market. Consequently, such provisions constitute a measure having equivalent effect to an import restriction contrary to Article 28 EC, because they create, for imported books, a distinct regulation which has the effect of treating products from other member States less favorably.
The Court also held that the Austrian legislation could not be justified under Article 30 EC. Although the protection of books as cultural objects can be considered an overriding requirement in the public interest, the particular measure was disproportionate as the importer or foreign publisher could not fix a retail price for the Austrian market taking into account the conditions of that particular market.