C-59/75

Article 37 (1) of the EEC Treaty must be When the transitional period ended interpreted as meaning that as from Article 37 (1) was capable of being relied 31 December 1969 every national on by nationals of Member States before monopoly of a commercial character national courts. must be adjusted so as to eliminate the exclusive right to import from other Member States.

In Case 59/75

Reference to the Court under Article 177 of the EEC Treaty by the Giudice Istruttore presso il Tribunale di Como (Investigating Judge at the Tribunale di Como) for a preliminary ruling in the criminal proceedings pending before that court between

PUBBLICO MINISTERO

and

FLAVIA MANGHERA AND OTHERS

gives the following

JUDGMENT

Facts

The order making the reference and the By resolution dated 21 April 1970 (JO written observations submitted under C 50 of 28. 4. 1970) the Council of Article 20 of the Protocol on the Statute Ministers of the EC agreed as follows: of the Court of Justice of the EEC may be summarized as follows: The French and Italian Governments undertake to take all necessary measures for the abolition of discrimination arising out of national monopolies of a I — Facts and procedure commercial nature.

Article 37 (1) of the EEC Treaty provides: The abolition of exclusive rights relating to importation and wholesale marketing 'Member States shall progressively adjust must be achieved by 1 January 1976 at the latest.' any State monopolies of a commercial character so as to ensure that when the transitional period has ended no The Italian Law No 907 of 17 July 1942 discrimination regarding the conditions established a State monopoly for 'the under which goods are procured and manufacture, preparation, import and marketed exists between nationals of sale of tobacco'. Member States.

The defendants in the main proceedings, The provisions of this article shall apply Manghera and Others, subsequent to to any body through which a Member 1 January 1970 imported tobacco State, in law or in fact, either directly or manufactured abroad and, at least in part, indirectly supervises, determines or in Member States of the Community, appreciably influences imports or exports into Italian territory without passing between Member States. These provisions through the State monopoly and without shall likewise apply to monopolies paying the duties on these products then delegated by the State to others.' in force.

Tribunale di Como decided by order dated 30 June 1975 to stay the In accordance with Article 20 of the proceedings and to refer the following Protocol on the Statute of the Court of questions to the Court for a preliminary Justice of the EEC written observations ruling under Article 177 of the Treaty: were submitted on 8 September 1975 (1) Is Article 37 (1) of the Treaty to be by the Council of the European interpreted as meaning that, with Communities, on 11 September 1975 effect from 31 December 1969 (the by the Commission, on 20 September date when the transitional period 1975 by the defendants in the main expired), the trade monopoly should proceedings, Flavia Manghera and have been reorganized in such a way Others, and on 23 September 1975 by as to eliminate even the possibility of the Government of the Italian Republic. any discrimination being practised against Community exporters, with After hearing the report of the the consequential extinction, with Judge-Rapporteur and the views of the effect from 1 January 1970, of the Advocate-General the Court decided to exclusive right to import from other open the oral procedure without a Member States? preparatory inquiry. (2) Is Article 37 (1) of the Treaty directly applicable within the Community States and has it created individual II — Summary of the written rights which the national judicial observations submitted to bodies must protect? the Court (3) Was it in consequence possible for parties other than the monopoly, (a) The first question after 1 January 1970, to import into Italian territory products subject to The defendants in the main proceedings, the tobacco monopoly system Flavia Manghera and Others, point out embodied in Law No 907 of 17 July that Article 37 is designed to abolish 1942 and coming from Community even the possibility of any discrimi­ countries, subject to their paying the nation.

thereto among the rules which ensure Even assuming that Article 90 could be this free movement. opposed to Article 37 (1) in the present case, the overlapping between these two Above all they directed their attention to rules should nevertheless be construed so the restrictions created by the legislative as to ensure that they are mutually measures establishing the monopoly and observed. Applying the distinction it was only then that they concerned employed by the Court in its case-law themselves with the restrictions which devoted to Articles 9 and 12 and 95 of are the consequence of the particular and the Treaty the less significant rule should actual authority of the monopoly. not limit but on the contrary should The desire to abolish also and above all supplement the prohibition contained in the discriminatory provisions is not the basic rule. The scope of Article 90 would thus be defined in terms unconnected with the fact that to achieve this result the Member States, instead of compatible with the prohibition in

Article 37'. Only the abolition of the Regulation No 727/70 of 21 April 1970 exclusive right of sale could therefore on the common organization of the rule out any possibility of discrimination. market in raw tobacco (OJ English Special Edition, 1970 (I), p. 206) does not The obligation to restructure the contain any such extension but on the monopoly before 31 December 1969 so contrary in its fifteenth recital declares as to avoid any discrimination follows that quantitative restrictions which unequivocally from Article 37 of the formed part of a national organization of

PUBBLICO MINISTERO v MANGHERA

production or in the interests of the exclusive rights, whereas when there was balance of payments. The abolition of no such abolition, no adjustment in such discrimination thus requires a accordance with Article 37 was achieved. special provision applicable to national monopolies of a commercial character In any event the maintenance of enabling such discrimination to be exclusive rights to import and market is prevented by removing the possibility contrary to the objective of the said thereof. article when such rights are held by the State, in the wide sense, which itself Does this answer involve as such the produces the goods in question since the abolition of the monopoly's exclusive monopoly cannot but prefer its own right to import? products to those of its competitors. Such a preferential system amounts to a Article 37 provides for 'adjustment' or measure having an effect equivalent to a 'adaptation' and not abolition. Further, quantitative restriction on imports. This this exclusive right does not in itself is precisely the position in the main constitute discrimination contrary to proceedings. Article 37 and may continue to exist in so far as it is ensured that 'no These considerations explain why the discrimination regarding the conditions Commission has initiated numerous

under which goods are procured and procedures for infringement. marketed exist between the nationals of Member States'. In accordance with this Finally, for there to be a fiscal monopoly analysis the Commission has been led, in it is necessary that the objective should all its recommendations to Member go beyond the simple imposition of a tax States made under the provisions of on consumption and that it cannot be Article 37 (6) before the end of the achieved without the maintenance of the transitional period in respect of monopoly. The fiscal revenue from the monopolies other than the French and sale of tobacco is as large if not larger in Italian monopolies of manufactured Member States where import and tobacco, to regard the abolition of marketing monopolies do not exist as in exclusive rights as 'the best solution those States where such monopolies do because it is immediately effective in exist.

are practically nil. Accordingly the Article 37 is likewise 'clear' from the interpretation of Article 37 is irrelevant point of view of the strictness of its in the present case. In any event Article contents. Of course, unlike the provisions 37 assumes that national monopolies of a which it lays down for the abolition of commercial character are to continue; it the other obstacles to the free movement further provides for the removal of any of goods, the Treaty does not envisage discrimination between the nationals of any compulsory measures to secure Member States regarding the conditions observance of the time-table for the under which goods are procured and abolition of the restrictions which the marketed. Therefore the exclusive right monopoly involves. The Treaty is based to import (or at least the possibility of on a 'maximum limitation period'. regulating imports in order not adversely to affect the monopoly), which is an Article 37, moreover, has not conferred essential factor in the concept of a any specific legislative power on the monopoly of commercial character, is Commission which can only make not in itself contrary to the Treaty. This 'recommendations'. right may exist provided that its exercise does not give rise to any such A close examination reveals that the discrimination. If a national of another prohibitions relating to monopolies are Member State were treated with regard to as strict and as mandatory as those in the conditions of supply in the same way Articles 9 to 35. as an Italian, there would be no discrimination. In any event the The very wording of the rule reveals a exclusive right to import was abolished particularly clear political intention (no by Article 4 of the Law No 825 of discrimination) expressing a 'strict 13 July 1965 which authorizes 'subject imperative' according to the language of to permission from the State the Advocate-General in the case of Administration, the importation into the SAIL This strictness may be judged by territory of the Republic subject to the the fact that Article 37 (2) covers a set of monopoly of quantities of manufactured very diverse situations. tobacco in excess of 4 kg'. The Commission observes that the Court (b) The second and third questions has already found that Article 37 (2) has a direct effect (Case 6/64 [1964] ECR 585). The defendants Flavia Manghera and The only difference between this others stress that the Court has not yet paragraph and the first paragraph is the had to rule expressly on the question of date on which the obligation in question the direct applicability of Article 37 (1) became absolute.

coming into effect of the common in Article 236, which none of the organization relating to raw tobacco, legislative measures provided for by which occured after the end of the Article 189, and a fortiori the Resolution transitional period, that the French and of the Council of 21 April 1970, could Italian manufactured tobacco monopolies replace. had to be adjusted (as the Commission had conceded on referring to the As regards the nature of this resolution it provisions of Article 34 (4)), but at the should be noted that the two proposals latest on 1 January 1970, that is to say, at mentioned in the Official Journal of the the end of the transitional period. European Communities originates solely from the two States concerned and the Further it must be borne in mind that Council decided to include these since 1 January 1970, when a monopoly declarations in the minutes of 21 April has not been adjusted in an original 1970. It is thus a promise by two States Member State in accordance with Article in default to make good the situation 37, the exclusive right to import can no within a certain period. The agreement longer be employed against individuals of the other States means at the most as regards products originating in or the acquiescence of a Community coming from other Member States of the institution.

8 of the Treaty. To extend, therefore, the time-limit in the first of these provisions The Council, when adopting this beyond the normal expiration of the resolution, decided to include in the transitional period it would have been minutes a declaration stating that 'the necessary to amend the second provision provisions of the present resolution in no by recourse to the procedure laid down way prejudice the application of Article

JUDGMENT OF 3. 2. 1976 - CASE 59/75

January 1976. The resolution cannot by way of amendment of Article 37 of have this effect both by reason of its the Treaty) but to indicate on a political nature and its subject-matter. The level the action to be taken by the two resolution is a measure of a political Member States concerned in this matter nature not intended to have legal effects and if appropriate by the Council itself. and incapable of producing any. By The resolution thus contains a political measures of this nature (cf. Judgments of undertaking by the Italian Government the Court in Joined Cases 90 and 91/63 to take all necessary measures for the [1964] ECR 625 and Case 9/73 [1973] abolition of discrimination arising from ECR 1135, 1160 and Case 10/73 [1973] the monopoly and expresses the will of ECR 1175, 1194) the Council expresses the Council and, in so far as it concerns its intentions with regard to possible it, the undertkaing of the Italian future action which it might itself pursue Government to abolish exclusive rights in the exercise of the powers which the relating to importation by 1 January Treaty confers on it or with regard to 1976 at the latest.

monopolies. The second paragraph states institutional character based on Articles 4 that the abolition of exclusive rights (1), 145 and 236 of the Treaty and relating to importation, must be achieved becuase Article 37 of the Treaty does not by 1 January 1976 at the latest. itself confer any special power on the Council, the latter has no power to In adopting this resolution the Council amend the scope of this article. Nor does obviously assumed that the abolition of it have the power to enforce the abolition the exclusive rights to import, which it of the exclusive right to import as from contemplated as taking place at the latest 1 January 1976. on 1 January 1976, had not automatically occurred under the Treaty as early as The Resolution of 21 April 1970 and 1 January 1970. the undertakings entered into in this by

3 The first question asks whether Article 37 (1) of the Treaty is to be interpreted as meaning that, with effect from 31 December 1969 (the date when the transitional period expired), the trade monopoly should have been reorganized in such a way as to eliminate even the possibility of any discrimination being practised against Community exporters, with the consequential extinction, with effect from 1 January 1970, of the exclusive right to import from other Member States.

4 Under Article 37 (1) Member States must progressively adjust any State monopolies of a commercial character so as to ensure that when the

JUDGMENT OF 3. 2. 1976 — CASE 59/75

transitional period has ended no discrimination regarding the conditions under which goods are procured and marketed exists between the nationals of Member States.

5 Without requiring the abolition of the said monopolies, this provision prescribes in mandatory terms that they must be adjusted in such a way as to ensure that when the transitional period has ended such discrimination shall cease to exist.

6 For the purposes of interpreting Article 37 as regards the nature and scope of the adjustment prescribed it must be considered in its context in relation to the other paragraphs of the same article and in its place in the general scheme of the Treaty.

10 This objective would not be attained if, in a Member State where a commercial monopoly exists, the free movement of goods from other Member States similar to those with which the national monopoly is concerned were not ensured.

11 The Council's Resolution of 21 April 1970 on national monopolies of a commercial character in manufactured tobacco itself refers to the obligation to abolish exclusive rights to import and market manufactured tobacco.

12 The exclusive right to import manufactured products of the monopoly in question thus constitutes, in respect of Community exporters, discrimination prohibited by Article 37 (1).

13 The answer to the first question should therefore be that Article 37 (1) of the EEC Treaty must be interpreted as meaning that as from 31 December 1969 every national monopoly of a commercial character must be adjusted so as to eliminate the exclusive right to import from other Member States.

14 The second question asks whether Article 37 (1) of the Treaty is directly applicable and whether it has created individual rights which the national judicial bodies must protect.

15 The fact that at the end of the transitional period no discrimination regarding the conditions under which goods are procured and marketed must exist between nationals of Member States constitutes an obligation with a very precise objective subject to a clause postponing its operation.

20 Under the terms of the said resolution 'the French and Italian Governments

undertake to take all necessary measures for the abolition of discrimination arising out of national monopolies of a commercial nature. The abolition of exclusive rights relating to importation and wholesale marketing must be achieved by 1 January 1976 at the lates'.

21 The said resolution which basically expresses the political will of the Council and the French and Italian Governments to put an end to a state of affairs contravening Article 37 (1), cannot engender effects which can be used against individuals.

In particular the time-scale referred to in the resolution cannot prevail over that contained in the Treaty.

22 The fourth question must therefore be answered in the negative.

Costs

2. When the transitional period ended Article 37 (1) was capable of being relied on by nationals of Member States before national courts.

4. The Council Resolution of 21 April 1970 does not alter the scope and the provisions of Article 37 (1).

Lecourt Kutscher Donner

Mertens de Wilmars Sørensen Mackenzie Stuart O'Keeffe

Delivered in open court in Luxembourg on 3 February 1976.

A. Van Houtte R. Lecourt