C-78/76

on the interpretation of Articles 9 (1), 12, 13 (2), 92, 93 and 95 of the EEC Treaty,

THE COURT

composed of: H. Kutscher, President, A. M. Donner and P. Pescatore, Presidents of Chambers, J. Mertens de Wilmars, M. Sørensen, Lord Mackenzie Stuart, A. O'Keeffe, G. Bosco and A. Touffait, Judges,

Advocate-General: J.-P. Warner Registrar: A. Van Houtte

gives the following

JUDGMENT

der deutschen Land-, Forst- und Germany into further products for, in Ernährungswirtschaft' (Fund for sales this case, they were regarded as promotion in the German Agricultural benefiting likewise from the sales and Food Industry and in German promotion, but the Law on the Fund was Forestry), hereinafter referred to as 'the amended by a Law of 23 March 1972 Fund'. The objective of this fund, set up exempting from then on citrus by a Federal Law of 26 June 1969 (BGBl. concentrates from the contribution. I, p. 635) is to promote, by means of a body called 'Centrale Marketing 3. In the national court the plaintiff in Gesellschaft' (CMG), the sale and export the main action challenged the legality of products of the German agricultural of the contribution which it was required and food industry and of German to pay (DM 20 000 over a period of 19 forestry by opening up and fostering months) on the ground that this markets at home and abroad.

and food sector. The amount of the Article 92 of the EEC Treaty and contribution depends upon the kind of subsequently from deciding upon the undertakings concerned. Agricultural and application of this provision? forestry undertakings pay a contribution (b) Is the meaning of the expression which is fixed according to land tax or 'undertakings or the production of head of cattle; processing undertakings certain goods' in Article 92 of the pay a contribution based on 'the most EEC Treaty restricted to private busi nesses or does it also include non

market research and advertising 2. Until 1972 fruit and vegetables carried on by the State agency in its imported from abroad contributed to the own country and abroad is also financing of the Fund if they were carried on by similar institutions of processed in the Federal Republic of other Community countries?

(b) Article 92 (1) refers to aid 'favouring Upon reading the report of the certain undertakings or the production of Judge-Rapporteur, and upon hearing the certain goods' and it is necessary to Advocate-General, the Court decided to determine whether these words likewise open the oral procedure without any cover non-profit-making institutions preparatory inquiry. governed by public law, such as the Fund. II — Written observations sub­ (c) and (d) Article 92 prohibits aid granted through State resources and in mitted pursuant to Article 20 of the Protocol on the view of the facts of the case it is Statute of the Court of necessary to inquire whether this applies where the institution which grants the Justice of the EEC aid is financed by contributions from (1) The Commission undertakings which it benefits. Is there aid in the sense of a gratuitous benefit The Commission makes the preliminary when the beneficiary is a State institution observation that the Law of 26 June 1969 or has an undertaking a gratuitous was first submitted to it in accordance advantage because it makes only an with Article 93 of the EEC Treaty and insignificant contribution compared with that it remains under the constant review the benefit which it draws from the to which the systems of aid in the Fund? Member States are subjected.

JUDGMENT OF 22. 3. 1977 - CASE 78/76

Citing the case-law of the Court of together and interpreted by the Court Justice (Case 6/64, 15 July 1974, Costa v of Justice, no action may be brought Enel [1964] ECR 585; Case 120/73, 11 before the national court to apply the December 1973, Lorenz [1973] ECR provisions of Article 92. 1471; Case 77/72, 19 June 1973, (d) In the abovementioned circumstances Capolongo [1973] ECR 611) the it is only in case they may be of Commission considers that the following use that the Commission submits is the position: observations on the substantive in­ (a) In the case of 'new aid', that is to say, terpretation of Article 92 with replies aid granted after the entry into force to questions (b), (c), (d) and (e). of the Treaty, national courts have jurisdiction only to consider whether B — The substantive interpretation it has been granted in accordance of Article 92 with the procedure for checking provided for in Article 93 or by the regulations adopted under Article 94 Question (b) and, if this is not so, to find that aid granted in disregard of this procedure In the Commission's view the concepts comes under a prohibition which has of 'production' and 'undertakings' in direct effect and may be relied on Article 92 are independent of the legal before the courts. institutions in which they are found. (b) In the case of existing aid, that is to say aid established before the entry In the present case the legal status of the into force of the Treaty, or aid Fund is of even less consequence since it introduced subsequently but in is not the true beneficiary of the aid accordance with the procedure for which merely passes through its hands to checking provided for by Article 93, benefit undertakings and the production national courts cannot decide of German agriculture and the food whether such aid is incompatible industry.

Questions (c) and (d) ask whether the contribution in question must be regarded as a charge having an To reply to these questions it is necessary effect equivalent to a customs duty. first, as shown above, to distinguish the true beneficiary of the aid from the With regard to this question and that agency which administers it and first under (g) (which relates to Article 95 of receives it. It is from the point of view of the Treaty) the Commission refers first of the former that it is necessary to judge all to the case-law of the Court to the the propriety of the aid. Further, for the effect that a contribution cannot be both application of Article 92 (1) it matters a charge having an effect equivalent to a little that the 'State resources come from customs duty and internal taxation, since the 'general budget', special taxes or even the two concepts are mutually exclusive. contributions imposed by a sovereign act

reason of its nature, to be processed and Member States to administer and grant if similar national products were not aid. taxed on processing. In view of the differences in the structures of production from one Nevertheless in the Commission's view Member State to another the same aid there is no doubt that the system of dues could have very different effects on established under the Fund comes within competition. Member States could not in the sphere of internal taxation within the any event ensure justice by establishing meaning of Article 95, as interpreted, in their turn identical or similar aid. inter alia, by the abovementioned judgment in IGAV. C — The interpretation of the provisions prohibiting charges The Commission however draws having an effect equivalent to attention to the fact that according to the customs duties and discrimi case-law of the Court (Case 77/72, 19 natory internal taxation June 1973, Capolongo [1973] ECR 611 and Case 94/74, 18 June 1975, IGAV Questions (f) and (g) [1975) ECR 699) a duty which on principle should be regarded as internal These questions concern the interpret

JUDGMENT OF 22. 3. 1977 - CASE 78/76

customs duty where, although applying the taxation affecting domestic products equally to domestic and imported and that affecting imported products products, it is used specifically and arises from the fact that the yield of the exclusively to benefit domestic products. taxation goes exclusively for purposes benefiting domestic products alone how The application of Article 13 to the benefit granted to domestic products situations normally covered by Article 95 should be assessed. In the Commission's should, however, be confined to 'the view this would be an impossible task so strictly limited one of substantial fraud that the national court would be led on the law', otherwise the distinction to declare the system completely between the respective scopes of Articles incompatible with Article 95. 13 and 95 would be eroded.

It follows from the judgment of 4 April (2) Observations of the Government of 1968 in Case 34/67 Luck [1968] ECR the Federal Republic of Germany 245 that in this case it is for the national courts to decide according to their national law whether taxation which Question (a) infringes Article 95 must be completely annulled or only reduced to the level In the view of the Government of the of taxation affecting similar domestic Federal Republic of Germany Article 93 products. If this second solution is of the EEC Treaty cannot justify a required in German law it may be asked limitation on the power of national in a case where the inequality between courts to make a reference for a

STEINIKE UND WEINLIG v GERMANY

In the first case, as shown by the case-law accordance with the procedure of the Court of Justice, the prohibition provided for in Article 93, Article 92 on putting the aid into effect is directly of the EEC Treaty gives the applicable and creates rights in favour of individual no rights requiring to be the individual which the national courts protected by national courts. are required to protect. This direct effect of Article 93 means that the national Question (b) court can verify whether the measures The Government of the Federal Republic taken accord with the concept of aid as of Germany makes the preliminary used in Articles 92 and 93. observation that in its view question (b) and also questions (c), (d) and (e) serve no The national court can in this case judge purpose since Article 92 is not directly the incompatibility of the aid, which applicable. Nevertheless it will make presupposes that the direct effect of the brief observations on the questions. last part of Article 93 (3) to a certain extent involves Article 92 of the EEC In answer to question (b) the German Treaty being directly applicable. Government observes that neither the

Question (d) domestic products. In the case of the Fund the resources arising from the The Government of the Federal Republic contribution exacted both from home- of Germany states that the fact that the produced fruit and vegetables and from beneficiary of aid is a State agency does imported products are used to help the not exclude the possibility that there is sale of products processed in Germany aid within the meaning of Article 92 of both from imported and home-produced the EEC Treaty. However, the form of fruit and vegetables. The advantage from financing chosen by the legislature, the charge does not, therefore, benefit namely the obligatory payment of a the domestic raw product competing contribution, does not make the Fund, with the imported product. which is a self-governing institution of the agricultural economic system, a Question (g) recipient of aid within the meaning of Article 92 of the Treaty. With regard to the question whether the imposition of taxation on the products of Question (e) other Member States not when they are imported but only when they are In judging whether a State measure processed amounts to discrimination distorts competition it does not matter within the meaning of Article 95 of the whether similar measures distorting EEC Treaty, the Government of the competition are adopted by other Federal Republic of Germany observes Member States of the Community. that for the prohibition in Article 95 of Market research and advertising, however, the Treaty to apply there must be by a State agency cannot be regarded as discrimination between the domestic and affecting trade between Member States imported products subject to the charge and distorting competition where the at the same stage of production. activity of the State agency benefits both Question (g) by the Verwaltungsgericht domestic and foreign producers. Frankfurt, must therefore be answered as follows: Question (f) There can only be a varying, With regard to the question whether a discriminatory charge on imported charge, which is not levied on the products within the meaning of Article imported product itself but when it is 95 of the EEC Treaty where the domestic processed, is a charge having an effect products competing with them, and not equivalent to a dustoms duty, the on the other hand the domestic Government of the Federal Republic of processed products, are subject to a lower Germany takes the view that the charge. contributions in question cannot be classified as charges having an effect (3) Observations of Firma Steinike & equivalent to customs duties. Weinlig

It must be entitled to make a reference Question (c) for a preliminary ruling in relation to Article 92 of the EEC Treaty and then The question asked is based on the apply this provision in considering the fallacy that the Fund is the beneficiary of national law. the aid whereas in fact it simply collects and distributes funds. Although the question of the direct application of Article 92 is not the In any event aid which originates from a subject of the reference for a preliminary fund which in turn is financed by ruling, nevertheless the plaintiff observes contributions or direct State subsidies that the prohibition in Article 92 is must be regarded as being granted implemented by Article 12 of Regulation 'through State resources'. No 865/68 of the Council, which is itself directly applicable and which, by citing Question (d) separately Article 92, has made it directly applicable. In the main action the This question has two parts: the first plaintiff, moreover, has alleged an which is concerned with whether there infringement of Article 93 (3) of the EEC can be said to be aid within the meaning Treaty: The German Law of 26 June of Article 92 where the recipient of aid is 1969, published in the Bundesgesetzblatt not an undertaking but a State agency, on 28 June 1969, was not notified to the overlooks the fact that it is not the Fund, Permanent Representation of the Federal which is only a collector and distributor Republic of Germany until 4 July 1969. of the relevant finance, but the individual The plaintiff in the main action does not undertakings, on behalf of whose know whether this Law has been products the CMG advertises, which subsequently notified to the benefit. With regard to the second part of Commission, but it certainly could no the question relating to the gratuitous longer have been notified as a 'draft nature of the aid, the plaintiff states what measure'. has to be considered is whether as a whole the Law on the Fund constitutes Question (b) an aid, since the contribution of the individual undertaking in relation to the Question (b) asked by the Ver­ total receipts cannot be decisive. waltungsgericht Frankfurt is irrelevant since the Fund does not itself undertake Question (e) market research or advertising but under Paragraph 2 (2) of the Law puts funds With regard to Question (e) the plaintiff at the disposal of a 'Centrale states that there is distortion of Marketing-Gesellschaft der deutschen competition and trade between Member

An answer to Question (g) is unnecessary The plaintiff in the main action takes the since the contribution in question is in view that the Absatzfondsgesetz infringes the nature of a charge having an effect also the prohibition on measures having equivalent to a customs duty. an effect equivalent to quantitative restrictions (Articles 30 et seq. of the The plaintiff, however, refers to the fact Treaty and Article 10 of Regulation No that 'the prohibition on discrimination in 865/68), since German undertakings can Article 95 of the EEC Treaty relates only spend less on advertising. to the fact of taxation as such without any reference to import or the manner Question (f) and time of levying'. The plaintiff states that this question At the hearing on 25 January 1975 the relates to the supposition that the plaintiff in the main action, represented contribution in question is a charge by Dr Ehle, Advocate of the Cologne having an effect equivalent to a customs Bar, the Government of the Federal duty and queries whether it is so and Republic, represented by its Agent, Mr whether the charge may be regarded as Seidel and the Commission of the being levied 'on import where it is not European Communities represented by related to the crossing of the frontier but its Agent, Mr Oldekop, submitted oral to the subsequent processing of the observations. imported products. The Advocate-General delivered his In the plaintiff's view the contribution in opinion at the hearing on 10 February question must be regarded as a charge 1977.

Decision

1 By order dated 10 June 1976, received at the Court Registry on 2 August 1976, the Verwaltungsgericht Frankfurt am Main raised various questions under Article 177 of the EEC Treaty relating to the interpretation of Articles

2 The plaintiff in the main action takes the view that the charges demanded of it infringe the Treaty and are not payable because on the one hand the purpose is to finance aid incompatible with Article 92 of the Treaty and on the other hand since they were levied on the processing of citrus concentrates from other Member States although there is no similar product in the country of import they are either charges having an equivalent effect to a customs duty prohibited by Articles 9, 12 and 13 of the Treaty or internal taxation discriminating against a product from another Member State contrary to Article 95.

3 The Federal Law of 23 March 1972 provides that the contested contribution shall not be levied in respect of processing in a German undertaking of 'products which do not grow naturally in the climatic conditions of the territory to which this Law (on the Fund) applies'; citrus concentrates are thus exempted from the contribution. The contested contribution applies however to citrus concentrates which were imported and processed before the law of 23 March 1972 entered into force.

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4 The questions referred for a preliminary ruling must be answered in this light.

The first question

5 The Verwaltungsgericht asks first whether the procedural rules prescribed in Article 93 of the EEC Treaty preclude a national court from obtaining a preliminary ruling on Article 92 of the EEC Treaty and subsequently from deciding upon the application of this provision. This question is concerned with how far the national courts can invoke Article 92 of the Treaty in the legal systems of the Member States whether it be at the behest of parties or of their own motion.

7 Further the third subparagraph of Article 93 (2) of the Treaty provides: 'On application by a Member State, the Council, may, acting unanimously, decide that aid which that State is granting or intends to grant shall be considered to be compatible with the common market, in derogation from the provisions of Article 92 or from the regulations provided for in Article 94, if such a decision is justified by exceptional circumstances. If, as regards the aid in question, the Commission has already initiated the procedure provided for in the first subparagraph of this paragraph, the fact that the State concerned has made its application to the Council shall have the effect of suspending that procedure until the Council has made its attitude known'. The Council may under Article 94 of the Treaty 'make any appropriate regulations for the application of Articles 92 and 93 and may in particular determine the conditions in which Article 93 (3) shall apply and the categories of aid exempted from this procedure'. Finally regard must be had to the powers given to the Council by Article 12 in respect of agricultural products.

STEINIKE UND WEINLIG v GERMANY

8 These provisions show that the prohibition in Article 92 (1) is neither absolute nor unconditional since Article 92 (3) and Article 93 (2) give the Commission a wide discretion and the Council extensive power to admit aids in derogation from the general prohibition in Article 92 (1).

11 The plaintiff in the main action claims that Article 12 of Regulation No 865/68 of the Council of 28 June 1968 on the common organization of the market in products processed from fruit and vegetables is a specific implementing measure of the aforesaid kind enabling individuals to rely on Article 92 before national courts for the purpose of a finding that State aid is incompatible with the common market and in particular with the relevant organization of the market.

12 The said Article 12 provides; 'Save as otherwise provided in this regulation, Articles 92, 93 and 94 of the Treaty shall apply to the production of and trade in the products listed in Article 1'.

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13 In accordance with Article 42 of the Treaty, Article 12 declares that the provisions of Articles 92 to 94 shall apply to the agricultural products coming within the ambit of Regulation No 865/68 without however altering the nature and scope of these provisions.

14 The limitations mentioned above on reliance on Article 92 do not however

mean that cases cannot come before national courts requiring them to interpret (making use if necessary of the procedure under Article 177 of the Treaty) and apply the provisions contained in Article 92, but nevertheless they cannot be called upon to find that such State aid is incompatible save in the case of aid introduced contrary to Article 93 (3). Thus a national court may have cause to interpret and apply the concept of aid contained in Article 92 in order to determine whether State aid introduced without observance of

Member States shall neither enact nor maintain in force any measure contrary to the rules contained in this Treaty, in particular to those rules provided for in Article 7 and Articles 85 to 94'. Article 90 (2) provides: 'Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in this Treaty, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the Community'.

18 From this it follows that save for the reservation in Article 90 (2) of the Treaty, Article 92 covers all private and public undertakings and all their production.

The third and fourth questions

19 Thirdly the national court asks whether the concept 'any aid granted through State resources' is satisfied even if the State agency itself receives aid from the State or private undertakings. The fourth question asks whether there is aid in the sense of granting a gratuitous advantage if the recipient of aid is not a private undertaking but a State agency, and whether it can be said to be gratuitous when the charge on the individual undertaking is insignificant in relation to the total amount of contributions.

20 These two questions must be taken together.

21 The prohibition contained in Article 92 (1) covers all aid granted by a Member State or through State resources without its being necessary to make a distinction whether the aid is granted directly by the State or by public or private bodies established or appointed by it to administer the aid. In applying Article 92 regard must primarily be had to the effects of the aid on the undertakings or producers favoured and not the status of the institutions entrusted with the distribution and administration of the aid.

25 The sixth question asks the Court to decide whether a charge levied not on the imported product itself but on its processing is a charge having an effect equivalent to a customs duty under Articles 9 (1), 12 and 13 (2) of the EEC Treaty. The seventh question asks whether the imposition of taxation on 'the products of other Member States' not when they are imported but only when they are processed amounts to discrimination within the meaning of Article 95 of the EEC Treaty.

26 These two questions relate to the distinction between a charge having an effect equivalent to a customs duty within the meaning of Articles 9, 12 and 13 of the Treaty and internal taxation within the meaning of Article 95; they are intended to enable the national court to classify the levy due to the fund into one of the two categories. The two questions must therefore be dealt with together.

27 The same charge cannot within the system of the Treaty fall simultaneously within the two aforementioned categories in view of the fact that whereas Articles 9 and 12 prohibit Member States from introducing between themselves any new customs duties on imports or exports or any charges having equivalent effect, Article 95 is limited to prohibiting discrimination against the products of other Member States by means of internal taxation.

28 As was ruled in the judgment of 18 June 1975 (Case 94/74 IGAV [1975] ECR 710) to which the national court refers, the prohibition contained in Article 13 (2) is aimed at any tax demanded at the time of or by reason of

STEINIKE UND WEINLIG v GERMANY

30 Financial charges within a general system of internal taxation applying systematically to domestic and imported products according to the same criteria are not to be considered as charges having equivalent effect. This could be the case even where there is no domestic product similar to the imported product providing that the charge applies to whole classes of domestic or foreign products which are all in the same position no matter what their origin. The objective of Article 95 is to abolish direct or indirect discrimination against imported products but not to place them in a privileged tax position in relation to domestic products. There is generally no discrimination such as is prohibited by Article 95 where internal taxation applies to domestic products and to previously imported products on their being processed into more elaborate products without any distinctions of rate, basis of assessment or detailed rules for the levying thereof being made between them by reason of their origin.

Costs

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

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On those grounds,

THE COURT

5. Any breach by a Member State of an obligation under the Treaty in connexion with the prohibition laid down in Article 92 cannot be justified by the fact that other Member States are also failing to fulfil this obligation.

6. Where the conditions which distinguish a charge having an effect equivalent to a customs duty are fulfilled, the fact that it

STEINIKE UND WEINLIG v GERMANY

is applied at the stage of marketing or processing of the product subsequent to its crossing the frontier is irrelevant when the product is charged solely by reason of its crossing the frontier, which factor excludes the domestic product from similar taxation.

7. There is generally no discrimination such as is prohibited by Article 95 where internal taxation applies to domestic products and to previously imported products on their being processed into more elaborate products without any distinctions of rate, basis of assessment or detailed rules for the levying thereof being made between them by reason of their origin.

Kutscher Donner Pescatore Mertens de Wilmars Sørensen