C-82/77

Jacobus Philippus van Tiggele , residing in Maasdam, Netherlands,

on the interpretation of Articles 30 to 37 and 92 to 94 of the said Treaty,

THE COURT

composed of: H. Kutscher, President, M. Sørensen and G. Bosco (Presidents of Chambers), A. M. Donner, P. Pescatore, Lord Mackenzie Stuart and A. O'Keeffe, Judges,

Advocate General: F. Capotorti Registrar: A. Van Houtte

gives the following

I — Facts and procedure 17 December 1975 is prohibited as a quantitative restriction on imports 1. Mr van Tiggele, a licensed or a measure having equivalent victualler, was sentenced by the effect? Economische Politierechter (Police (2) Must Articles 92 to 94 of the EEC Magistrate for Commercial Cases) of Treaty be interpreted as meaning the Arrondissementsrechtbank (District that the fixing of minimum prices Court), Rotterdam, by a judgment for the marketing of spirits in the delivered on 18 May 1976 to pay a fine Netherlands as laid down by the of Hfl 5 000 or to three months' Regulation concerning the price of imprisonment in respect of continued spirits by the Board of Managers of infringement of the rules concerning the the Production Board for Spirits on minimum prices for the marketing of 17 December 1975 is to be regarded spirits in the Netherlands, in particular as an aid granted by the Article 2 (1) of the Prijsverordening Netherlands which is incompatible Gedistilleerde Dranken (regulation with the Common Market? concerning the price of spirits) published in the Verordeningenblad 3. The disputed Prijsverordening Bedrijfsorganisatie No 50 of 31 Gedistilleerde Dranken laid down for December 1975 under No G Dr. 5 and the retail sale of spirits within the issued by the Produktschap voor Netherlands the following minimum Gedistilleerde Dranken (Production prices: Board for Spirits) on 17 December 1975. (a) new hollands gin and 'vieux' (the latter being a cognac-flavoured The Gerechtshof (Court of Appeal), drink, not to be confused with old The Hague, by a judgment of 11 hollands gin) October 1976 quashed the judgment of the Economische Politierechter on the — the 'catalogue price per unit' ground that price control was not valid increased by Hfl 0.60, the total under Netherlands law. That judgment being then increased by value was however quashed on 17 May 1977 added tax ('VAT') at the rate of by the Hoge Raad (Supreme Court) 16%. The final price must not in which referred the case to the any event be less than Hfl 11.25 Gerechtshof, Amsterdam, for a fresh per litre (Article 2 (1) of the Prijs­ judgment at last instance on the appeal. verordening). The catalogue price per unit is 2. By an order of 30 June 1977 the the price stated by the manu­ Gerechtshof, Amsterdam, suspended the facturer in his price-lists on 6 proceedings and requested the Court of October 1975 for unit sales, Justice, in accordance with Article 177 before deduction of discounts, of the EEC Treaty, to deliver a pre­ plus the increase in excise duties liminary ruling on the following of 1 January 1976 (the excise questions: duties being in fact borne by the (1) Must Articles 30 to 37 of the EEC manufacturer who passes them Treaty be interpreted as meaning on to his purchasers) and that the fixing of minimum prices without VAT. Manufacturers for the marketing of spirits in the may modify such catalogue Netherlands as laid down in the prices per unit or fix new Regulation concerning the price of catalogue prices per unit in spirits by the Board of Managers of respect of products which were the Production Board for Spirits on not yet included in their price-

(b) for old hollands gin: Hfl 11.25 per 1974: 8 569, 1975: 5 541, 1976: 25 727 litre (Article 2 (3) of the Prijsver­ It is also common ground the parties to ordening); the present proceedings that, since no (c) for all other spirits; catalogue price per unit was notified for hollands gin imported from abroad, the The purchase price (that is to say general floor price of Hfl 11.25 is in the purchase price actually paid or fact the sole price applicable thereto. payable, after deduction of all The Produktschap was empowered to discounts and without VAT) plus VAT (Article 4 of the Prijsver­ fix such minimum price rules by Royal Decree (Koninklijk Besluit) No 51 of 18 ordening). December 1975 (Staatsblad 1975, p. 746). The statement of reasons on All those minimum retail selling prices which the Royal Decree is based is within the Netherlands are applicable worded as follows: without distinction to spirits produced in the Netherlands and imported 'For some time past there have been indications in connexion with the products. The prices also apply to products manufactured in the formation of retail prices for spirits Netherlands which are exported and which have led us and the Produktschap voor Gedistilleerde Dranken to consider- subsequently re-imported. that it is necessary to enact the pro­ Article 8 of the Prijsverordening visions necessary to empower the contains the following provision: Produktschap to fix minimum prices for 'The President of the Produktschap may the sale of spirits on the domestic in certain cases or categories of cases market. In fact spirits are sold to the grant exemption from the application of public with increasing frequency at the provisions of this regulation. Such prices distinctly lower than the prices exemptions may be made subject to prevailing until recently under the conditions.' system, which has now been abandoned, of individual agreements on resale price It is common ground between the maintenance. parties concerned in the procedure for the preliminary ruling that new hollands Although we are in principle in favour gin, old hollands gin and vieux are of price competition we consider that typical Netherlands products which are the fall in prices which has occurred and which will no doubt continue tends to scarcely ever imported from abroad. On the basis of the information supplied by bring about such a low level of prices that even modern, efficient and well- the Commission the principal exception is hollands gin imported from Belgium managed wine and spirit businesses can which, according to the estimates of the no longer cover their distribution costs. Produktschap, amounted in recent years We also consider that a continuance of to the following quantities (in litres of the present situation might ruin under­ 100% of alcohol): takings which, if competition on prices

were restricted, would no doubt have not binding since they were prohibited the opportunity of adapting their by the Wet op de Economische methods of operation and the level of Mededinging (law on commercial their costs over a fairly short period to competition). those of modern, efficient and well- After that judgment manufacturers managed undertakings. It appears to us abandoned resale price maintenance finally that it is impossible to ignore agreements. This gave rise to a 'price entirely the particular nature of such war' which quickly brought about a fall products in relation to public health. of several guilders in the price per litre There seems to us nothing to indicate at of branded spirits. the present time that competition on prices will of its own accord become 4. The order of the Gerechtshof,

the Netherlands. portion of sales in this sector. Having heard the report of the Judge Since it is at present impossible to Rapporteur the Court decided to open foresee whether the circumstances the oral procedure without any which have given rise to this excessive preparatory inquiry. price competition with regard to spirits will continue to have effect in future we consider it desirable to empower the II — Written observations sub Produktschap to fix prices for a period mitted to the Court of three years only. Furthermore we

In the Netherlands price competition in connexion with wines and spirits distri Since the provisions in question bution was limited by individual resale constitute a measure adopted by public authorities it is not subject to the review price maintenance agreements which of the Court under Article 85 of the were applied by mutual agreement by a majority of Netherlands distillers. The Treaty (see the Court's judgment of 18 President of the Arrondissementsrecht- June 1975 in Case 94/74, IGAV v bank, Utrecht, took the view in his ENCC ([1975] ECR 699)). judgment of 22 September 1975 on an Nevertheless the accused in the main application for the adoption of interim action examines first of all a number of measures (Nederlands Juristenblad principles laid down by the Court 1976, No 95) that such agreements were concerning competition law.

Whether the contested rules fixing In view of the wording of the definition minimum prices were applied by the of a measure having an effect equivalent sector concerned by mutual agreement to a quantitative restriction which the or in the form of a concerted practice Court set out in its judgment of 11 July such an agreement or practice is 1974 in Case 8/74, Procureur du Roi v contrary to the prohibition in Article 85 Benoît and Dassonville ([1974] ECR (1) of the Treaty.

The rules in dispute are at least a [1975] ECR 1491). potential hindrance to intra-Community The fact that agreements or concerted trade: lower production costs abroad practices are limited to undertakings are prevented from making an impact within a single Member State does not on the Netherlands market; in such exclude them from the field of circumstances there can be no interpen application of Article 85. On the etration of various national markets; the contrary the Court of Justice has laid walling off of the national market has down in its case-law that agreements reached an optimum level and national between undertakings which cover the production is effectively protected; the entire territory of a Member State a rules in dispute formally pursue the priori affect trade between Member same objective as an agreement on States (see in this connexion the prices between undertakings but the fact judgments in the abovementioned Cases that they are governed by public law 48/69 and 73/74 and the judgment of

20/74). For a trade to be affected restriction. This conclusion follows from within the meaning of Article 85 of the Directive No 70/50/EEC of the Treaty it is sufficient that following the Commission of 22 December 1969, agreement in question trade between based on the provisions of Article 3 (7) Member States develops otherwise than of the EEC Treaty, on the abolition of would have been the case in the absence measures which have an effect of the restrictions resulting from it (see equivalent to quantitative restrictions on judgment of the Court of 13 July 1966 imports and are not covered by other in Joined Cases 56 an 58/64, Grundig provisions adopted in pursuance of the and Consten v Commission ([1966] ECR EEC Treaty, English Special Edition 299)). 1970 (I), p. 17), from the reply given by

the Commission on 21 December 1976 which would be profitable in normal to Written Question No 366/76 competitive conditions. This claim is submitted by Mr Cousté (Official borne out by two facts: despite the rules Journal C 27 of 3 February 1977, p. 4) in question only about half the retail and from the case-law of the Court. In wine and spirit businesses in the the judgment of 26 February 1976 in Netherlands are profitable; after the Case 65/75, Tasca, and in the judgment regulation entered into force the prices in Joined Cases 88 to 90/75, Tasca and of well-known brands of hollands gin Sadam v Comitate Interministeriale dei and vieux settled at a lower level than Prezzi ([1976] ECR 291 and 323 before the system of resale price main respectively) the Court decided inter tenance was abandoned even though alia that a maximum price constitutes a value-added tax and excise duties measure having an effect equivalent to applicable to such products had in the quantitative restrictions if it is fixed at meantime been increased by more than such a level that it is no longer prof

question. minimum prices can constitute measures Finally it cannot be argued that the having an effect equivalent to disputed rules are compatible with quantitative restrictions only in so far as Community law by relying on the fact they have an effect on imports. that they are intended to protect small However, provisions concerning min undertakings. The Court rejected an imum prices must in principle be argument to this effect in its judgment of 17 February 1976 in Case 91/75, applicable both to imports and to Hauptzollamt Göttingen v Miritz domestic products. This must be so if a

Rules in such a way as to guarantee a fixing minimum prices thus do not minimum return only for undertakings constitute a measure having equivalent

effect within the meaning of Article 30 increased by Hfl 0.60 and by value added if, when the minimum price was fixed, tax, constitute an impediment to account was taken of differences imports: the minimum price is fixed existing in the cost price of domestic individually for each product, not on products and that of imported products the basis of the cost price or of the and if the rules provide, either explicitly quality of the domestic product; the by providing for the possibility of provision concerning prices applies express exemption in respect of imports, solely to sales to individuals and does or by implication, by allowing for not affect competition between exemptions of a general scope, for the importers and domestic traders; the adoption of special measures concerning provision in question even makes cheap imported products if the equality of offers particularly attractive to retailers treatment reserved for domestic since the difference between the products and imported products purchase price and the minimum price constitutes and impediment to imports. belongs entirely to them; only Only a refusal on the part of the competition between retailers is competent authorities to exercise their restricted, but such restriction has no powers to grant exemptions in favour of effect on trade between Member States. imported products, if the circumstances Likewise the catalogue price per unit justified such a step, could be does not constitute an impediment to considered as constituting a measure trade between Member States: since the

The Government of the Netherlands In general terms the regulation on emphasizes that it is unnecessary to take prices does not constitute an im account of every difference in price, pediment to imports since imports of however small, between the imported hollands gin and vieux are practically non-existent. product and the domestic product. In fact if that were necessary it would be The Government of the Netherlands quite impossible to supervise such then appraises separately the various provisions concerning prices, in provisions concerning minimum prices. particular where the cost price of the The prohibition on selling at prices below foreign product cannot be established. the actual cost prices cannot in any way The Government of the Netherlands affect trade between Member States. concludes that the rules in question This provision leaves retailers entirely at comply with the abovementioned liberty to pass on to consumers the full conditions for the conformity of a benefit of rebates, discounts and system of minimum prices with the provisions concerning prices obtained Treaty: the minimum price was fixed on on purchasing the imported products. the basis of the level of prices applied to Neither does the regulation, which cheap spirits, which certainly differed provides that the catalogue price per unit from the level of prices of well-known fixed by the manufacturer shall be brands of spirits, but within which the

prices of various kinds of hollands gin Dassonville, the judgment of 23 January and vieux did not differ greatly. Article 1975 in Case 31/74, Galli ([1975] ECR 8 of the regulation furthermore makes it 47), the judgment in Case 65/75, Tasca, possible to exempt imported products and the judgment delivered in Joined from the provisions of the rules on Cases 88 to 90/75, Sadam. price-control; however, that provision With regard to the fact that exports to

minimum prices, unlike maximum December 1969, which states that prices, of necessity distort price measures applying without distinction to competition between the products on 'the marketing of products' come within the market. Viewed in this light a the prohibition on measures having an system of minimum retail prices like the effect equivalent to quantitative re one in question may thus be compared strictions where 'the restrictive effect of to a collective system of resale price such measures on the free movement of maintenance agreements, freely entered goods exceeds the effects intrinsic to into.

trade'. Article 3 does not indeed refer to of his prices such systems in fact lead to measures governing prices and profit horizontal agreements whereby the margins as examples of such 'trade persons concerned, in this case manufac rules'; nevertheless it is clear that with turers and importers participating in regard to such measures criteria must be such agreements, undertake to apply the adopted which are at least identical to, system of maintained prices to the resale if not more stringent than, those of their products The participation of mentioned in the directive since they importers means that international trade exercise a direct influence on the must inevitably be affected, especially if operation of the market and on the most important importers are parties competition, and this indeed often their to the agreements. express purpose, as in the case of the The Commission then examines each of disputed Netherlands price rules. the three systems of minimum prices in In the present case it is of prime dispute in order to establish whether importance to establish the effect which they are capable of influencing trade

JUDGMENT OF 24.1.1978 — CASE 82/77

ducts. products of a comparable price and quality would develop if there were no Whether the imported products could floor price. be offered more cheaply to consumers if If the opportunities for price there were no floor price and whether a competition at retail level were more re floor price limits price competition in stricted for imported than for domestic respect of cheap imported drinks more products comparable in price and in than for home-produced drinks is a quality there would in any event be an question of fact which must be settled impediment to imports which would fall by the national court.

competitive. Although the general floor price leaves With regard to imported products that prices entirely free to find their own rule is in fact applied only to branded level at the production, wholesale and Netherlands products exported to other import stages such freedom is not Member States for subsequent resale to Netherlands retailers because the manu capable of cancelling entirely any facturers established in those other restrictive effect on imports caused by the general minimum price to the Member States did not notify the consumer; at the most it can only catalogue price per unit. alleviate this effect somewhat and even By excluding all price competition

abroad. selling price by rebates in the case, for It follows that the general floor price in example, of self-service sales or large- fact restricts price competition between scale purchases.

cannot be considered that this part of Commission recalls in this connexion

the contested price-control rules can the criterion set out in Article 85 (3) in impede imports. accordance with which an agreement may not impose on the undertakings The Commission observes with regard concerned restrictions which are not to the rules on competition in the indispensable to the attainment of the Treaty that, although they are only objectives of the agreement. applicable to undertakings the Member States cannot ignore them. The rule imposing minimum profit margins on the other hand appears not The Commission maintains that, whilst to restrict competition and intra- it is impossible at the present time to Community trade more than is deny to the Member States any power necessary to attain the objective in view, to impose minimum price systems it is always provided however that the profit necessary, in order to appraise the margin fixed is not excessive. This is a compatibility of such systems with question of fact which the national Article 30, to take into consideration court must settle. The system restricts the principles set out in the rules on competition at the retail stage and competition in Article 85. allows it to have full effect at the The Commission thus reiterates the production, importation and wholesale argument which it put forward in Case stages. Seen from this point of view also 13/77, G.B.-INNO-BM. v Vereniging this rule does not entail a greater degree

JUDGMENT OF 24.1.1978 — CASE 82/77

. . is to be regarded as restriction on trade prohibited by Article an aid within the meaning of Article 92 30 of the Treaty in so far as it is applied for which, before it is put into effect, to products imported from other the procedure laid down in Article 93 Member States which, if that floor price (3) must be followed?' In this connexion did not exist, could be supplied to the he claims that the establishment of an consumer at a lower price. On the other aid without following the procedural hand the rule imposing minimum profit requirements of Article 93 (3) cannot be margins and the prohibition on sales at justified by arguing, as in the present a loss does not fall within the case, that the measure is not or ought prohibition set out in Article 30. not to be incompatible with the Treaty. The concept of an 'aid' must be The Commission accordingly proposes interpreted widely in accordance with that the reply to the first question should read as follows: the objective referred to in the relevant provisions and must encompass all aids 'National rules, applicable without whatever which, regardless of their distinction to domestic products and form, are intended to favour certain imported products, fixing minimum undertakings or certain productions. prices for retail sales on the domestic According to the case-law of the Court, market of a product for which there is namely the judgment of 2 July 1974 in no common organization of the market Case 173/73, Italy v Commission constitute, in so far as their application ([1974] ECR 709); judgment of 22 to products imported from other March 1977 in Case 78/76, Steinike and Member States is concerned, a measure Weinlig v Germany ([1977] ECR 595), having an effect equivalent to Article 92 does not draw any distinction quantitative restrictions on imports if on the basis of the causes or objectives the price is fixed at such a level that, of the measures in question; it considers taking into account both the prices for them solely in terms of their this product prevailing in other Member consequences; the measure in the States and the general conditions of present case thus constitutes an aid competition between domestic products within the meaning of Articles 92 and and the imported products in question, 93 of the Treaty and, before this it has the effect of impeding imports measure was put into effect, the directly or indirectly, actually or Commission should have been informed

OPENBAAR MINISTERIE OF THE NETHERLANDS v VAN TIGGELE

([1973] ECR 813) that exemption from from 5 541 litres to 25 727 litres. In this a charge can constitute an aid only if connexion the Court had noted that the the following conditions are fulfilled: new rules entered into force on 6 the charge in question must be of a January 1976. financial nature, it must be imposed by The accused in the main action and the the public authorities and the exemption Commission declared that they were must have been granted by the public unable to explain these facts. authorities. A system of minimum prices does not fulfil any of these conditions. The Government of the Netherlands The Commission considers that the rules observed in this connexion that the total

Decision

1 By an order of 30 June 1977 which was received at the Court on 5 July 1977 the Gerechtshof, Amsterdam, submitted, pursuant to Article 177 of the EEC Treaty, two questions on the interpretation, first, of Articles 30 to 37

JUDGMENT OF 24. 1. 1978 — CASE 82/77

of the Treaty concerning the elimination of quantitative restrictions on trade between Member States and, secondly, of Articles 92 to 94 of the Treaty concerning aids granted by States.

2 Those questions were submitted in connexion with criminal proceedings instituted against a licensed victualler who was accused of selling alcoholic beverages at prices below the minimum prices fixed by the Produktschap voor Gedistilleerde Dranken pursuant to the Royal Decree of 18 December 1975 (Staatsblad No 746).

3 The regulation of the Produktschap of 17 December 1975 concerning the price of spirits, approved by the Minister for Economic Affairs on 19 December 1975, established within the country a system of minimum retail prices which varied according to each category of spirits.

OPENBAAR MINISTERIE OF THE NETHERLANDS v VAN TIGGELE

The first question

10 The first question asks in substance whether Articles 30 to 37 of the Treaty must be interpreted as meaning that the prohibition which they set out covers price-control rules such as those concerned in the present proceedings.

11 Article 30 of the Treaty prohibits in trade between Member States all measures having an effect equivalent to quantitative restrictions.

12 For the purposes of this prohibition it is sufficient that the measures in question are likely to hinder, directly or indirectly, actually or potentially, imports between Member States.

13 Whilst national price-control rules applicable without distinction to domestic products and imported products cannot in general produce such an effect they may do so in certain specific cases.

18 On the other hand this is not so in the case of a minimum price fixed at a specific amount which, although applicable without distinction to domestic products and imported products, is capable of having an adverse effect on the marketing of the latter in so far as it prevents their lower cost price from being reflected in the retail selling price.

19 This is the conclusion which must be drawn even though the competent authority is empowered to grant exemptions from the fixed minimum price and though this power is freely applied to imported products, since the requirement that importers and traders must comply with the administrative formalities inherent in such a system may in itself constitute a measure having an effect equivalent to a quantitative restriction.

20 The temporary nature of the application of the fixed minimum prices is not a factor capable of justifying such a measure since it is incompatible on other grounds with Article 30 of the Treaty.

21 The answer to the first question must therefore be that Article 30 of the EEC Treaty must be interpreted to mean that the establishment by a national authority of a minimum retail price fixed at a specific amount and applicable without distinction to domestic products and imported products constitutes, in conditions such as those laid down in the regulation made by the Produktschap voor Gedistilleerde Dranken on 17 December 1975, a measure having an effect equivalent to a quantitative restriction on imports which is prohibited under the said Article 30.

The second question

22 The second question asks in substance whether Articles 92 to 94 of the Treaty must be interpreted as meaning that price-control rules such as those in the present case constitute an aid granted by the State.

27 The costs incurred by the Government of the Kingdom of the Netherlands and the Commission of the European Communities which have submitted observations to the Court are not recoverable.

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

On those grounds,

THE COURT,

in answer to the questions submitted to it by the Gerechtshof, Amsterdam, by an order of 30 June 1977, hereby rules:

1. Article 30 of the EEC Treaty must be interpreted to mean that the establishment by a national authority of a minimum retail price fixed at a specific amount and applicable without distinction to domestic products and imported products constitutes, in conditions such as those laid down in the Regulation made by the Produktschap voor Gestilleerde Dranken on 17 December 1975, a measure having an

A. Van Houtte H. Kutscher

Registrar President

OPINION OF MR ADVOCATE GENERAL CAPOTORTI DELIVERED ON 13 DECEMBER 1977 1

Mr President, were required to observe. However, Members of the Court, the Arrondissementsrechtbank (District 1. The principal point raised in the Court), Utrecht, in a judgment of 22 present proceedings may be summarized September 1975 ruled that such an thus: is a national provision whereby agreed system of prices was minimum prices for the retail sale of incompatible with the Netherlands Wet given products are fixed compatible op de economische Mededinging (law with the prohibition on measures equi­ on commercial competition). Fierce valent to quantitative restrictions on competition ensued in the trade, imports contained in Article 30 of the accompanied by an appreciable fall in EEC Treaty? prices. In order to avoid the ruin of The products in quesuon are two types many small traders the Board of of alcoholic beverages which are very Managers of the Produktschap voor common in the Netherlands: hollands Gedistilleerde Dranken (the agency gin and 'vieux' (a cognac-flavoured empowered to supervise the production drink). Netherlands manufacturers of and marketing of spirits) was em­ these drinks had for long applied by powered under Koninklijk Besluit mutual agreement a system of resale (Royal Decree) No 51 of 18 December price maintenance which distributors 1975 to control prices for a period not

1 — Translated from the Italian.