C-91/75

JUDGMENT OF 17. 2. 1976 — CASE 91/75

In Case 91/75

Reference to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof for a preliminary ruling in the action pending before that court between

HAUPTZOLLAMT GÖTTINGEN

BUNDESFINANZMINISTER

and

gives the following

JUDGMENT

Facts

The order making the reference and the for internal consumption, citrus peel written observations submitted under distillates imported from Italy, the Article 20 of the Statute of the Court of quantity of spirit in which amounted to Justice of the EEC may be summarized 360.8 litres in all, and had to pay the as follows: monopoly equalization duty. By notice of assessment of 18 May 1971, the Customs Office demanded payment of DM 404 I — Facts and procedure (DM 112 per hectolitre) as a special equalization charge pursuant to Article 1 Wolfgang Miritz GmbH & Co. withdrew (1) of the Law of 23 December 1970 on from its bonded warehouse in Germany, the imposition of a special equalization

HAUPTZOLLAMT GÖTTINGEN v MIRITZ

the EEC Treaty. Written observations were lodged under Miritz brought an action against the Article 20 of the Protocol on the Statute imposition of the 'Preisausgleich' before of the Court of Justice of the EEC by the the Finanzgericht Hamburg which, by Federal Republic of Germany, Miritz

JUDGMENT OF 17. 2. 1976 — CASE 91/75

GmbH & Co. and the Commission of the price at which the monopoly sells its European Communities. alcohol constitutes a handicap to foreign producers, in other words, discrimination The Court put questions to the Federal between nationals of Member States in Republic of Germany and to the regard to conditions of sale. As the Commission. charge concerned is a new measure, the reply to the first question from the Bundesfinanzhof must be in the II — Summary of the written affirmative. observations

HAUPTZOLLAMT GÖTTINGEN v MIRITZ

provisions of Article 37 (2) of the Treaty In its view, the Member States may, until and it is of no avail to rely upon Article the common organization of the market 37 (4) of the Treaty. comes into force, provide for quantitative restrictions, even after the end of the Observations of the Federal Republic of transitional period. In Case 48/74, Germany Charmasson [1974] ECR 1383, the Court emphasized that the absence of a The Federal Republic of Germany deals common agricultural policy was contrary only with the third question which to the requirement of Article 3 (d) of the should, in its view, be answered in the Treaty without, on account of this, affirmative. drawing any conclusion that the absence of this policy made it necessary to In so far as the special conditions permit, after the end of the transitional defined in Article 37 (4) of the EEC period, derogations from the general Treaty for the adjustment of the rules of the Treaty which might be monopoly covered by that provision are embodied in a national organization of not satisfied, there is justification for

German products. The Commission suggests that the following reply should be given to the Alcohol manufacture based on agri questions referred to the Court. cultural raw materials can continue

Observations of Wolfgang Miritz In its reply, in Parliament, to Written GmbH & Co. Question No 513/70 from Mr Kriedemann (JO C 46, 1971, p. 5), the First question Commission described the introduction of an equalizing charge as the most Miritz states that this question is based suitable method of ensuring that German on the presumption that the amount of monopoly alcohols find a market and in the 'Preisausgleich' corresponds to the this way guaranteeing the employment general levy which the monopoly in and standard of living of the German ethyl alcohol imposes on similar producers concerned. domestic products. This question is decisive only when the facts have to be The Federal Republic of Germany states considered from the standpoint of the that this reply showed that the prohibition of discrimination [within the Commission correctly understood the meaning of Article 37 (1)]. conditions of competition on the German market in spirits. It is of primary The application of Article 12 of the EEC importance to draw attention to the Treaty is not rendered nugatory by dangerous situation which would be simultaneous application of Article 37 (2) created for German alcohol production if of the Treaty. the provisions introducing the contested charge were abolished without being The applicant contends that the Law on replaced. The economic position of the equalizing charge was not embodied German alcohol producers has not in the Law dealing with the monopoly in changed in recent years. No system ethyl alcohol. could have been established either at Community or national level which The prohibition of charges having would ensure equivalent safeguards for equivalent effect applies to any charge the employment and standard of living demanded on the occasion or by reason

of importation, which, because it is The introduction of a charge imposed specifically imposed on imported goods exclusively on imports of alcohol and to the exclusion of similar national alcohol products from other Member goods, increases their cost price and, in States conflicts with Article 12 of the consequence, has the same restrictive EEC Treaty, even if the amount of the effect on the free movement of goods as national charge corresponds to the a customs duty. general levy imposed by the monopoly in alcohol on similar national products There can be no doubt that the so long as national products are not equalizing charge constitutes a charge expressly subject to the same equalizing having equivalent effect since similar charge. national products are not subject to a charge. The normal selling price of the Article 37 (2) products subject to the monopoly does not correspond to a charge laid down by In the first place, there can be no doubt legislation but, on the contrary, to a price that the equalizing charge is a new laid down by the monopoly system and measure. Inasmuch as the Court finds made up of various elements which are that the equalizing charge is a charge neither known nor capable of being having equivalent effect, this offends individually checked. Prominent among under the second head of the prohibition those elements are the costs of the laid down in Article 37(2). German market organization in alcohol and the subsidies granted because the Even though the charges may be alcohol is, in certain cases, sold at a price introduced as part of a State monopoly of below the cost of production. Not only is a commercial character they must not the characteristic feature of a charge result in thwarting the absolute wanting but action is, moreover, taken to prohibition of charges having equivalent equal a price which has, in part, the effect. character of a subsidy and is designed to encourage activity for the benefit of Secondly, the new measure introduces national products only. discrimination regarding the conditions Even on the assumption that there is a under which alcohol is procured and certain relationship between the marketed. The aim of Article 37 (1) is to ensure that market conditions at the end 'Preisausgleich' and a particular fraction of the normal selling price and even if it of the transitional period are similar to is accepted that, although they were those on the national markets. Although, introduced under different laws, both when the transitional period has ended, charges form part of a general system of it is still possible for homeproduced and internal dues, the conditions enabling imported products to be taxed on equal them to be properly compared, on the terms, it is no longer lawful to maintain' basis of the same criterion, are wanting. charges, such as the equalizing charge, which offset costs for which the

Fourthly, Miritz lists examples of Article 37 (4) cannot be validly invoked discrimination to which, in its view, the after the end of the transitional period. contested charge gives rise: A recommendation of the Commission — The 'Preisausgleich' applicable to the various products may be changed based on Article 37 (6) cannot restrict the only if the variation is established as scope of Article 37 (1) and (2). In any being greater or less than a minimum event, the Commission changed its of DM 10. attitude on the subject of the German monopoly in the light of, in particular, — It is possible to buy, at best, at the the judgment delivered by the Court in average market rate and not at the Case 48/74 Charmasson ([1974] ECR lowest price prevailing in the 1383). exporting country. Moreover, there is no means of checking whether the Nor does Article 37 (4) permit exceptions prices selected by the Federal to be made to the prohibition laid down Minister of Finance are really correct. in Article 37 (1) and (2) on the ground — The free-at-German-frontier delivery that, in the Federal Republic of costs incurred in the exporting Germany, alcohol products, at the country are not taken into account present time, still form part of a national but they represent a substantial organization of the markets in proportion of the price. agriculture. This follows from the judgments delivered by the Court of Miritz states that, in this case, it procured Justice concerning the effects of the first quality ethyl alcohol in Belgium and expiry of the transitional period and, in transported it to Sicily for processing in particular, the judgment in Case 48/74 its factory. It calculates that, when Charmasson, referred to above. Miritz transport costs are taken into account, interprets this judgment as meaning that, the price of the alcohol was appreciably after expiry of the transitional period, higher than the price of German alcohol. national provisions which create exceptions and hinder the attainment of Article 37 (4) the objectives of the common agricultural market are no longer lawful. Miritz expresses the view that Article 37 This would be so even if, at Community (4) of the EEC Treaty provides no level, there were no corresponding justification for charges having equivalent market organization. effect within the meaning of Article 12 of the EEC Treaty. The provision in Finally, Miritz states that citrus peel Article 12 prohibiting charges having distillates do not constitute an

only in the Federal Republic of Germany production. This protection is achieved and France. by imposing the full amount of the 'State charge' (Lit. 60 000 per hectolitre) on all In the Federal Republic, the existence of imports of alcohol or alcoholic drinks, the alcohol monopoly is justified on regardless of the product used for their grounds of agricultural policy and policy manufacture. This system makes it towards medium and small-scale possible for the volume of imports of businesses. This object finds expression alcohol and of alcoholic drinks into Italy in the fixing of the basic price of alcohol. to be maintained at a very modest level. The average German distillery is of modest proportions. Furthermore, Italy recently raised to 30 % the level of VAT applicable to With regard to the disposal of spirituous liquors manufactured from unprocessed alcohol, the German Law on cereals and sugar (other alcoholic drinks: the alcohol monopoly contains details of 12 %). standard selling prices and reduced selling prices to be applied according to Denmark operates an indirect system of the use to be made of the alcohol. taxing alcohol the effect of which is, where necessary, also to protect domestic These prices, before tax, range from DM production; DKr 92.80 per litre is 263 per hectolitre (peak price) to DM 65 charged on 'akvavit' and 'snaps' whereas per hectolitre. other spirits are subject to a duty of DKr 137.00 per litre. In France, the monopoly price system is based on the price of alcohol In the Benelux countries, the level of manufactured from sugar beet. In the prices is such that the amount of alcohol case of alcohol produced from other imported from other Member States is materials, a coefficient is applied to this small. Moreover, the Benelux countries 'basic price'. As in the Federal Republic are authorized by the Commission to of Germany, selling prices depend on the impose an equalizing charge on imports use to which the product is put. These of ethyl alcohol from France and prices, before tax, range from FF 600 per Germany, where there is a monopoly hectolitre to FF 75 per hectolitre. (Commission Decision No 70/67/EEC of 30 December 1969, JO L 19 of 26. 1. The selling prices, before tax, for alcohol 1970, p. 50). The decision applies 'until in the Benelux countries and in Italy are there is a new Commission decision, and appreciably lower than the prices ruling at the latest until measures for common

question of abolishing the German State's "import monopoly arose, it was The clear indication given by the Court realized that the 'Monopolausgleich­ of the legal rules on monopoly and the spitze' was not in all cases sufficient to adjustment of structures makes it easier bring the price of alcoholic products to effect the establishment of a common from other countries of the Community organization for alcohol which, five years up to the level of the German selling after the end of the transitional period, price. The equalization charge was has still not been achieved. thereupon introduced as an additional variable levy in order to bring up the price of alcoholic drinks imported from For the Federal Republic of Germany countries where the price of alcohol used Mr Seidel, acting as Agent, pointed out for the manufacture of alcoholic drinks that, in the present case, the provisions of was lower than the price prevailing in Article 37 (1), (2) and (4) constitute, in the Federal Republic of Germany. As the relation to the provisions of Article 12, a level of prices in France is kept virtually lex specialis. The present case involves an essential feature of the German at the same level as that in the Federal Republic, no equalization charge is monopoly in alcohol. imposed on imports from France. He pointed out that provisions With regard to the social and economic abolishing certain rules of the German background, Mr Ehle pointed out that, monopoly would lead to serious when price equalization is carried out, consequences: 1 300 agricultural due regard is paid to the maintenance of distilleries and nearly 4 000 farms would the national price, which is based on the be affected and, in addition, nearly average price prevailing among German 27 000 other distilleries and 250 000 potato distillers whose average output is persons holding stocks of raw materials in the region of 500 hectolitres. But, would, in turn, be involved. Merely to generally speaking, 500-hectolitre abolish the special equalization charge distilleries only just pay their way. There would, in the Federal Republic, have is a structural problem in this matter, damaging economic effects on farms which has for years remained unresolved which benefit from the existence of the although the Commission, in its 1969 monopoly. recommendation, clearly indicated that the fixing of prices must be based on a In Article 37, those who drew up the capacity of 10 000 hectolitres. The Treaty provided for a set of rules which structural problem has existed for 17 are quite separate in that the protection years but nothing has been done. The provided by monopolies which can Treaty itself states that monopolies are to operate only by means of a be adjusted within the framework of the discriminatory measure is accorded legal common market even though adjustment recognition by this provision of the of the structures concerned raises serious Treaty. In view of the failure of the problems for some alcohol producers. Council of Ministers to act and the Moreover the alcohol industry is not the absence of Community rules concerning only industrial activity integrated into the alcohol manufactured from agricultural

conditions, they may be applied by analogy: the procedural rules of the The Commission's view of the situation Court of Justice do not wholly prevent it corresponds exactly to the view which from making a creative interpretation in was prevalent until the proceedings in law and, in so doing, acknowledging its Charmasson (Case 48/74). The Court power to grant a period of grace. held that national organizations might be kept in existence but not beyond the For the Commission, Mr Wägenbaur, transitional period. Even although it is acting as Agent, recalled that, in the still possible to differentiate between the Commission's view, Article 37 (1) can facts in the present case and those in apply only if the conditions in Article 37 Charmasson, the Commission now (4) are fulfilled. This interpretation, on believes that there should be no return to the part of the Commission, is based on the view which it took at that time. the interpretation of a whole series of legal measures relating to agriculture; for It comes to the conclusion that there

Law

1 By order of 18 June 1975, which reached the Court of Justice on 11 August 1975, the Bundesfinanzhof has referred to the Court under Article 177 of the EEC Treaty three questions concerning the interpretation of Articles 12 and 37 of the EEC Treaty.

The questions referred arose out of a dispute between a German importer of citrus peel distillates from Italy and the Customs authorities of the Federal Republic of Germany in which the issue was raised whether the special equalization charge on imports of alcoholic products, called the 'Preisausgleichsabgabe' was compatible with the provisions cited above.

2 The charge forms part of the adjustment of the State monopoly in alcohol embarked upon by the Federal Republic of Germany as a result of the Recommendation of the Commission of 22 December 1969 (JO L 31, 1970, p. 20) adopted pursuant to Article 37 (6) of the Treaty. In an endeavour to ensure equivalent safeguards for the employment and standard of living of the producers concerned whilst abolishing the monopoly's exclusive right to import, the Federal Republic of Germany introduced the charge, which is calculated on the basis of the difference between the basic price used to fix the price which the monopoly pays to the domestic alcohol producer and the lowest price at which it is possible to obtain pure alcohol in the exporting Member State.

3 It is clear from the file and the information supplied by the German Government and the Commission that, as neither the object nor the effect of the equalization charge is to offset an internal due levied on the domestic product it does not, in consequence, form part of a general system of internal dues.

7 Under Article 37 (1), Member States shall progressively adjust their state monopolies of a commercial character so as to ensure that no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of Member States. 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. Paragraph (2) refers to the obligation on all Member States to refrain, as from the beginning of the transitional period, from introducing any new measures likely to restrict the scope of the articles dealing with the abolition of customs duties and quantitative restrictions between Member States. Paragraph (3), moreover, provides that the time-table for adjustment provided for in paragraph (1) of the article must be harmonized with the abolition of quantitative restrictions on the same products provided for in Articles 30 to 34.

8 Article 37 (1) is not concerned exclusively with quantitative restrictions but prohibits any discrimination, when the transitional period has ended,

JUDGMENT OF 17. 2. 1976 — CASE 91/75

regarding the conditions under which goods are procured and marketed between nationals of Member States. It follows that its application is not limited to imports or exports which are directly subject to the monopoly but covers all measures which are connected with its existence and affect trade

between Member States in certain products, whether or not subject to the monopoly, and thus covers charges which result in discrimination against imported products as compared with national products coming under the monopoly. It follows from these provisions and their structure that the obligation laid down in paragraph (1) aims at ensuring compliance with the fundamental rule of the free movement of goods throughout the common market, in particular by the abolition, in trade between Member States, of customs duties and charges having equivalent effect. A charge of the type at issue introduced after the entry into force of the EEC Treaty is, accordingly, contrary to Article 37 (2).

HAUPTZOLLAMT GÖTTINGEN v MIRITZ

living of the producers concerned. Nevertheless these equivalent safeguards must themselves be compatible with the provisions of Article 37 (1) and (2).

12 The answer to the second and third questions of the national court must, accordingly, be that, after the end of the transitional period, Article 37 of the EEC Treaty prevents a Member State from levying a charge imposed only on products imported from another Member State for the purpose of compensating for the difference between the selling price of the product in the country from which it comes and the higher price paid by the State monopoly to domestic producers of the same product. The provisions of Article 37 (4) do not derogate from the other provisions of the article

Costs

13 The costs incurred by the Federal Republic of Germany and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable.

As these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the national court, the decision on costs is a matter for that court.

Lecourt Kutscher O'Keeffe

Donner Mertens de Wilmars Sørensen Mackenzie Stuart

Delivered in open court in Luxembourg on 17 February 1976.

A. Van Houtte R. Lecourt

Registrar President

OPINION OF MR ADVOCATE-GENERAL TRABUCCHI