The principle of free movement of goods is one of the cornerstones of the internal market. It simply means that national barriers (e.g. conditions on import or export, custom duty etc) to the free movement of goods within the EU will be removed. The notion behind this is to establish a Common Market by allowing goods to move freely within EU States. Member states have to remove all internal trade barriers to promote efficiency in production. Trade barriers may be of different kinds e.g. physical, technical and economic. As a result, all EU Member States must refrain from imposing all kinds of trade restrictions on imports, exports or goods in transit between themselves. Article 28-29 of the EC Treaty provides that Quantitative restrictions on imports and exports and all measures having equivalent effect shall be prohibited between Member States, subject to certain exceptions. Imposed prohibition could be justified on the grounds of public morality, public policy, public security, protection of health and life of human, animal and plants etc. The state could impose prohibition if it does not constitute arbitrary discrimination.
In the Centrafarm’s case, Sorensen J. justified that, when the product has been put onto the market in a legal manner in the member state by the trade mark proprietor himself or by anyone else but with his consent, then there will be no infringement of the trade mark if someone assert that its infringement then it is deemed to be an obstacle to the free movement of goods. So the decision vindicates that doctrine of exhaustion also aid the EU law to achieve its goal enshrined in Art.28-30 (New) of EC Treaty. Prima Facie, the Article 28 & 29 provides that, Rules which lay down any requirements for the goods originating in other Member States where they are lawfully manufactured and marketed, which hinder intra-Community trade, are void.
The Court developed the notion of ‘mutual recognition’ in Cassis de Dijon, which means that a Member State shall not deny access to its market by a product that has been lawfully produced or marketed in another Member State. In this case the importer argued that the German legal measure was in contravention of Art.28. But the German authorities argued that this measure was not concerned with country of origin at all, and would have applied to domestic as well as to imported products. The ECJ held that the measures were equivalent to a split, because its practical effect restricts imports, even though it did not directly target imported goods. The decision also strengthens the creation of the single market within EU.