Legal principles and points:
- In the case of C-71/02 Herbert Karner , an Austrian law prohibiting a certain type of advertisement was deemed as compatible with Article 34 Treaty on the Functioning of the European Union on the basis that the law complied with Cases C-276 and C-268/91 Keck and Mithouard  ECR I-6097, because itapplied to all traders within the national territory and applied to both domestic and imported goods. The Austrian law was also compatible with the freedom of expression as it pursued the public interest of consumer protection.
- An Austrian law prohibited advertisements which made reference to the fact that the goods in the advertisement originated from an insolvent estate when the goods in question, even though that was their origin, no longer form part of the insolvent estate.
- A company advertised an auction in a sales catalogue, stating that it was an ‘insolvency auction’, and that the goods were from the insolvent estate of the company in question. Karner, the applicant, believed that the advertisement was contrary to the Austrian law explained above, as it gave the impression that it is the insolvency administrator selling the company’s assets.
- The company that advertised the auction was refrained from doing so, and they sought to argue that the Austrian law is incompatible with both Article 34 TFEU, and Article 10 of the European Convention on Human Rights (ECHR).
Issues in Case C-71/02 Herbert Karner :
- Whether the Austrian law was a selling arrangement incompatible with Article 34 TFEU,
- Whether the Austrian law was incompatible with Article 10 ECHR.
Held by Court of Justice of the European Union (CJEU):
- The Austrian law was compatible with both Article 34 TFEU and Article 10 ECHR. With respect to Article 34 TFEU, the CJEU said that the law complied with the principles set out in the aforementioned Keck and Mithouard, set out below. With respect to Article 10 ECHR, the CJEU said that the law was reasonable and proportionate in the light of pursuing the public concern of consumer protection.
The CJEU specifically stated that:
Potential incompatibility with Article 34 TFEU :
- “It [the Austrian law] must be regarded as a selling arrangement within the meaning of Keck and Mithouard” [I-3067]
- “As is clear from Keck and Mithouard, such a selling arrangement cannot escape the prohibition laid down in Article 34 unless it satisfied the two conditions set out in paragraph 37 of this judgment” [I-3067]
-  “ (1) national provisions restricting or prohibiting certain selling arrangements which apply to all relevant traders operating within the national territory and affect in the same manner, in law and in fact, (2) the marketing of domestic products and of those from other member states are not such as to hinder directly or indirectly, actually or potentially, trade between Member States”. [I-3066]
- ‘ As regards to the first of those conditions, the Austrian law applies without distinction to all the operators concerned who carry on their business on Austrian territory, regardless of whether they are Austrian nationals of foreigners.  The Austrian law… does not lay down a total prohibition on all forms of advertising in a Member State for a product which is lawfully sold there… it nevertheless does not affect the marketing of products from other Member States more than it affects the marketing of products from the Member State in question” [I-3068]
Potential incompatibility with Article 10 ECHR:
- “Article 10 (2) ECHR states that freedom of expression is also subject to certain limitations justified by objectives in the public interests, insofar as those derogations are in accordance with law… and are necessary in a democratic society” [I-3070]
- “In this case… a restriction on advertising as provided for by the Austrian law is reasonable and proportionate in the light of the legitimate goals pursued by that provision, namely consumer protection and fair trading” [I-3071]