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In a landmark decision, the German Federal Court of Justice (BGH) has clarified the standard of proof required for justifying legislative restrictions on the EU's four freedoms in civil proceedings (I ZR 74/24 – Arzneimittel-Check). The BGH held that, even in disputes between private parties, national courts must assess whether the legislature provided sufficient empirical evidence to justify measures restricting EU freedoms. Political assumptions or plausible arguments alone are not sufficient under EU law.
Background: Prescription Perks and Price Rules
The Case
The case arose from a challenge by a Dutch online pharmacy, which offered German patients bonuses of up to EUR 9 for prescription drug purchases – either as direct discounts or as rewards for participating in a "medicine check." A Bavarian pharmacists' association claimed these promotions violated Germany's pharmaceutical price regulations, which prohibit discounts on prescription drugs, and obtained injunctions and cost awards from lower courts. On appeal, the Dutch pharmacy argued that the price rules constituted an unlawful restriction on the free movement of goods under EU law.
The Decision
The BGH overturned the lower court decisions, ruling that the German price regulations were not justified as a restriction on the free movement of goods vis-à-vis EU-based online pharmacies. The court found no adequate proof that the price regulation was suitable or necessary to achieve the stated public health objectives under Article 36 Treaty on the Functioning of the European Union. The BGH expressly referred to the evidence standards the CJEU set in Scotch Whisky Association (C-333/14) and Deutsche Parkinson Vereinigung (C-148/15), which require the court to objectively verify, using statistical data or other empirical methods, whether the chosen measures are suitable to reach the stated goal and whether less restrictive alternatives are available.
Key Takeaways from the BGH Ruling
- Empirical Evidence Is Essential: Courts must assess whether the legislator provided sufficient empirical data demonstrating the suitability and necessity of measures restricting EU fundamental freedoms. Mere assumptions or political debates, regardless of plausibility or popularity, do not suffice.
- Direct Application in Civil Litigation: For the first time, the court held that this evidentiary standard applies directly in civil disputes between private parties, not only in cases involving state actors or preliminary references to the CJEU.
- Burden of Proof Allocation: The party invoking the justification bears the risk of insufficient legislative evidence. Given parties' limited insight into legislative processes, courts are expected to proactively seek relevant legislative materials and official information.
- Objectivity and Transparency: The ruling calls for greater rationality and transparency in the legislative process. Legislators must effectively document empirical foundations and forecasts supporting restrictions on the four freedoms under EU law, so private parties do not bear the consequences of legislative imprecision or political maneuvering.
Takeaways
The BGH's decision raises the bar for justifying legislative restrictions on EU freedoms in civil litigation.
For practitioners, this means that both the documentation of legislative motives and the empirical basis for measures may be scrutinized. Parties relying on or challenging such regulations may expect courts to demand concrete data, not just plausible arguments, from legislators.
For legislators, the ruling underscores the need for thorough empirical documentation during the legislative process to withstand judicial review.
Regulation without sufficient factual basis, regardless of political consensus or plausible beliefs, is no longer tenable. The long-term impact of the decision will depend on how courts further specify procedural requirements, particularly where preventive regulation is involved and empirical data may be limited. Legislators cannot be required to prove that a measure prevented an outcome that never materialized. Nonetheless, the BGH's insistence on objective justification marks a decisive step towards evidence-based and transparent lawmaking.
* Special thanks to Law Clerk/JD Leo Mittag˘ for contributing to this GT Alert.
˘ Not admitted to the practice of law.
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