C-32/80

OFFICIER VAN JUSTITIE v KORTMANN

meets those criteria has different structure of such undertakings which effects on the cost prices of the manufacture or market such products various undertakings by reason of is irrelevant to the application of that particular features of the economic provision.

In Case 32/80

REFERENCE to the Court under Article 177 of the EEC Treaty by the Arrondissementsrechtbank [District Court] Roermond, The Netherlands, for a preliminary ruling in the action pending before that court between

OFFICIER VAN JUSTÍTIE [Public Prosecutor]

and

JUDGMENT

Facts and Issues

The judgment making the reference and I — Facts and procedure the observations submitted under Article 20 of the Protocol on the Statute of the In this case a preliminary question has Court of Justice of the EEC may be been referred to the Court of Justice summarized as follows: by the Arrondissementsrechtbank Roer-

JUDGMENT OF 28. 1. 1981 — CASE 32/80

mond, The Netherlands, before which The essential provisions of the simplified criminal proceedings were instituted system of monitoring thereby brought against Mr Kortmann, a Netherlands into force are formed by the said Article trader, who was charged with infringing 23 (2) and (3) of the Registration Order certain requirements of the rules on the which reads as follows : manufacture and marketing of medicinal products. Article 23 (2)

The basis of those rules is the law "Any person wishing to import from a relating to the supply of medicinal Member State a pharmaceutical product products (Wet op de Geneesmiddelen- as marketed in that Member State may, voorziening) of 28 July 1958 (Staatsblad on application, and in accordance with 408). It lays down as a requirement of the following provisions be entered by the production and supply of pharma- the Board in the register in question as ceutical preparations and proprietary the holder of the registration : medicinal products the prior registration of such products and preparations by a board which approves them and auth- (a) Where the product in question : orizes their uses.

OFFICIER VAN JUSTTTIE v KORTMANN

The scale of these charges was fixed by "Given that: an order (Vergoedingsbesluit), hereinafter referred to as "the Charges Order", of (a) certain pharmaceutical products are the Secretary of State for Health and the lawfully in free circulation in one or Environment of 15 December 1977 more Member States in the sense

JUDGMENT OF 28. 1. 1981 — CASE 32/80

that the permits required under ment, represented for that purpose by national law for those pharma- Mr Italianer, and by the Commission of ceutical products have been issued to the European Communities, represented the manufacturer or, where appro- for that purpose by Mr Beschel, a priate, to those who are responsible member of its Legal Department, assisted for putting the pharmaceutical by A. F. de Savornin Lohman of the products into circulation in each of Rotterdam Bar. the Member States; and

On hearing the report of the Judge- (b) third parties may be aware that such Rapporteur and the views of the permits have been granted in each of Advocate General the Court decided to the Member States because the fact open the oral procedure without holding has been officially published or has a preparatory inquiry. become generally known by some other means; and

II — W r i t t e n o b s e r v a t i o n s s u b - (c) a (parallel) importer of medicinal m i t t e d u n d e r A r t i c l e 20 of products established in one of the the P r o t o c o l on the S t a t u t e Member States imports into the of t h e C o u r t of J u s t i c e of Member State in which he is the E E C established the pharmaceutical products which are in circulation as described above, A — Observations of the Netherlands Government

to that of the product which has The initial registration fee fixed for the previously been registered in the parallel importer at the lowest rate, HFL Netherlands. That prior check on the 667, and calculated on the basis of the identity of a product is necessary in view average cost takes account of the fact of the fact that manufacturers of phar- that such importations are less onerous maceutical products sometimes vary the for the registration board since the composition or packaging of the same therapeutic effect and the relative product from one Member State to harmlessness of the medicinal products in another. When a parallel importer question have already been checked submits an application for the although the products still require a registration of a product he is required number of investigations and adminis- to supply only a limited number of facts trative measures. permitting the College ter Beoordeling van Geneesmiddelen [medicinal products registration board] to check that the product imported in parallel is identical with that already registered in the Netherlands. Furthermore each consign- The annual fee, which is also calculated ment of medicinal products imported in on the basis of the average cost, is in parallel undergoes a check when it is principle identical for all applicants and actually imported in order to establish there is a possibility of an exemption or a that it corresponds to the registered reduction in the amount without dis- product. That separate check was crimination for parallel importers as established following the said De Peijper well as for other persons liable. judgment as a substitute for the documents relating to the first check which a parallel importer is not in a position tö submit. Neither that second check nor the fee collected therefor is at issue in this case. Finally the medicinal (b) Examination of the question sub- products imported either in parallel or mitted officially by or in the name of the manu- facturer also undergo a disqualifying inspection relating to the conditions of storage and must comply with other conditions laid down by law for the supply of medicinal products. The Netherlands Government states first of all that the payment of fees does not and cannot affect consideration of the application for registration or the final registration of medicinal products imported in parallel. The medicinal product imported in parallel must be registered even though the single fee has The registration and monitoring entail not been paid and the registration, which considerable expense which justifies the includes the right of marketing the payment of a fee which, furthermore, product, cannot be cancelled if the covers only a part of the expenses annual monitoring fee remains unpaid. actually incurred. In its examination of Mr Kortmann, by adopting the view that the Charges Order the Netherlands he could not and should not pay the fee, Government stresses the distinction was thus wrong in considering himself between the annual fees and the initial released from the duty to apply for and registration fee. obtain the registration.

Turning next to the question submitted, registration of pharmaceutical products the Netherlands Government observes imported in parallel. that it falls into two parts: the Arron- dissementsrechtbank asks: (1) whether The Government of the Netherlands Article 36 authorizes a Member State to nevertheless concedes that the fact that make the importation of a medicinal the measures in question are in product conditional on payment of a fee accordance with Article 36 is not by for its registration. (2) If so, whether that itself sufficient to justify the charging of fee must be examined in the light of the fees at issue since the exception laid certain rules and what those rules are. down in Article 36 relates solely to the Nevertheless it is not clear whether the quantitative restrictions and measures first part of the question concerns the having an equivalent effect referred to in fact that the importation of products is Article 30 et seq. and not to charges subject to the collection of a fee (point having an equivalent effect as was stated (1) (a)) or whether it refers to the fact in the judgment of the Court of Justice that the fee must have been paid before of 10 December 1968 (Case 7/68 the importation can be effected (point Commission v Italy [1968] ECR 423).

In addition they form part of a system of The reply to the first part of the first registration and monitoring set up by question might thus be that: Council Directives 65/65/EEC of 26 January 1965 (Official Journal, English "The fees charged for the registration Special Edition 1965-1966, p. 20) and and monitoring of imported medicinal 319/75/EEC (Official Journal 1975, L products are compatible with 147, p. 13) on the approximation of Community law in so far as similar fees provisions laid down by law, regulation are charged in accordance with the same or administrative action relating to criteria for medicinal products manu- proprietary medicinal products. Finally factured on the national territory.

OFFICIER VAN JUSTITIE v KORTMANN

charged were so different one from Consideration of this aspect of the another that equality of treatment in fact problem appears less essential in view of constituted discrimination. That aspect of the fact that the rules in question do not, the problem was taken into account since either in law or in fact, make the the single payment charged on submission payment of the various fees a condition of the application for registration of of the registration of medicinal products medicinal products imported in parallel is imported in parallel. Nevertheless having much lower than that charged for the regard to the case-law in accordance first registration precisely because it is a with which the Court of Justice refrains simplified registration.

Point (2): The criteria which the are in particular fulfilled where amount of the fee must meet considerable differences in the processes to be carried out with regard to a given category of imported products, as Since the above examination has shown distinct from other products, are that the question submitted by the reflected in a general difference in the Arrondissementsrechtbank relates to fees charged for the various categories of internal taxation the provision to which products; these requirements are also reference must be made is Article 95. fulfilled where the tax rules make That provision requires that taxation provision for the possibility of an must be imposed in accordance with the exception in cases in which a system of same criteria and on the same basis for payments on the basis of the average imported products as for domestic amount of such expenses would produce products and excludes all discrimination. a completely unreasonable result and On the other hand within the framework where advantage is in fact taken of that of Article 95 the question whether or not provision."

B — Observations of the Commission 30. Such a measure can be justified only under Article 36 of the Treaty. If it is not so justified it follows automatically that all related financial charges are also ipso (1) The state of harmonization of the facto incompatible with the Treaty. market in medicinal products Where on the other hand, as in this case, the lawfulness of the measure is not directly called in question the lawfulness of the fees must be appraised in the light After describing the state of the market of Article 9 et seq. (prohibition of in medicinal products the Commission customs duties and of charges having proceeds to analyse the directives on equivalent effect) and of Article 95 of the harmonization adopted in this sphere. It Treaty (prohibition of discriminatory observes first of all that the authoriz- internal taxation). The Commission ations for placing such products on the accordingly proceeds to consider market of a Member State do not whether the two fees at issue are in concern the manufacturer or his importer accordance with this point of but the proprietary medicinal product as Community law. such following its examination and approval by the national authorities. It observes secondly that the system adopted in the directives on harmon- The single registration fee in the case of ization is directed neither towards the parallel imports establishment of a system of central authorizations at Community level nor towards a system of reciprocal recog- (a) With regard to Articles 9 and 12 nition of national authorizations but to a of the Treaty system "in which the national author- izations from one Member State to another form the basis of participation in Proceeding on the basis of the idea the national markets". The national expressed in the case-law of the Court of (territorial) authorizations are thus Justice that the prohibition of charges accepted as the basis and the directives having an effect equivalent to customs are intended only to remove obstacles duties is intended to prevent in trade arising from that system of national between Member States the imposition authorizations. The Commission ob- of any pecuniary charge based on the serves finally that the problems raised by fact of crossing the frontier of a Member parallel imports were not dealt with in State by goods moving within the the directives in question. Community, two criteria must be examined, the "importation of goods" and the "crossing or frontier". According to the Commission the registration (2) The question submitted procedure consists, in the case of a second applicant for registration, in checking by means of a sample, whether the goods may be marketed in the According to the Commission a Netherlands. In the case of a product procedure for authorization of the kind already lawfully marketed in another established by the national provisions in Member State with an identical form and question constitutes a measure having composition any pecuniary charge an effect equivalent to a quantitative imposed on the occasion of its crossing restriction within the meaning of Article the frontier constitutes a charge having

(b) Article 95 of the Treaty (b) The Netherlands rules set up a system of fees in order to cover the costs incurred by the authorities in checking A fee charged on an imported product an application for registration. When an on the occasion of its crossing the application for registration is submitted frontier also falls outside the concept of for a number of packagings of the same a tax having an effect equivalent to a product the rules prescribe a reduction of customs duty if it comes within a general 50% for the first registration because the system of internal taxation systematically checks carried out on the second and embracing domestic and imported subsequent packagings are more products in accordance with the same criteria. In that case regard must be had restricted than on the first (Article 6 (2) to Article 95 in judging whether it is in of the Charges Order). It might be accordance with the Treaty. expected on the basis of that principle that the second and subsequent applicants would enjoy corresponding reductions of 50% in the initial rate. However, according to Article 7 of the Two criteria must be taken into Charges Order that is not so; consideration for the purposes of Article 95. First the revenue from the tax must do no more than cover the costs. On the basis of the above-mentioned case of De Peijper the Commission maintains that (c) In accordance with Article 4 (3) of the national authority must in the first the Registration Order the Minister is place justify the amount of its expenses. empowered in certain special conditions In the second place the rules may not to grant at the request of the first person draw a distinction between the first registered partial exemption from the fee person to be registered and other payable for the first registration. N o such applicants. If a comparison is made provision is made for the second and between the first and subsequent subsequent persons registered.

The Commission considers that there application of Article 95 are not met so does not exist in this case a general that the matter must be approached on system of internal taxation applying the basis of Article 9 et seq. of the systematically and on the same criteria to Treaty. domestic and imported products. It considers, on the basis of the judgment of the Court of 5 February 1976 (Case The annual monitoring fee 87/75 Bresciani [1976] ECR 129), that it is necessary to ascertain whether the imported product and the national This fee, which is the same for the product are taxed at a similar stage of person first registered, the importer and production and distribution. Each the parallel importer, appears formally to occasion on which a sufficient degree of comply with the criterion of identical similarity cannot be established treatment under Article 95 of the Treaty. constitutes a breach of the principle of non-discrimination laid down by Article 95 and the charge in question has an The question submitted by the national effect equivalent to a customs duty. court however concerns the amount and frequency of the payments.

In registration of a trader in relation to a extreme cases parallel importers must thus effect eight registrations for each medicinal product which, by reason of packaging of the same product and pay the presumption that it meets the the annual fee eight times. This provision requirements, must be deemed to be is discriminatory in itself and it is known in all its details to the national necessary further to consider whether the authorities so that the examination may fee constitutes a covering of the relevant be limited to the finding that a medicinal costs. The Commission considers that product meets those requirements and whilst it may be possible for the more detailed examination is required Netherlands authorities to justify a fee in only in exceptional circumstances. this connexion of HFL 890, on the other hand it would be difficult to concede On those grounds the Commission tends that the multiplication of that amount is to the view that the very stringent justified by a corresponding increase in criteria adopted by the Court for the the burden of work.

OFFICIER VAN JUSTITIE v KORTMANN

raises the point whether the derogative during the present proceedings it may be provision in Article 15 (4) o f the difficult for the national court to Registration Order sufficiently offsets disregard such charges in the course of that factor since no parallel importer is a detailed appraisal of the parallel entitled to an exemption from or a importer's marketing opportunities. reduction in the annual fee payable by him. The Commission refrains from making specific suggestions as to the wording of the reply to the question submitted but For the sake of completeness the requests the Court to have regard to the Commission raises the question whether considerations which it has set out. regard should not be had to the fact that the position on the market of the parallel importer is adversely affected, as compared with that of the person first III — Oral p r o c e d u r e registered, by his obligation to pay other dues charged by the same authorities in addition to the fees which are at issue in At the sitting on 1 October 1980 the the main action. According to the defendant in the main action, Commission's information parallel represented by H.P. Ruysink, of the importers are liable to pay substantial Maastricht Bar, the Commission of the sums pursuant to Article 47 (1) of the European Communities, represented by Besluit Farmaceutische Produkte [Phar- M. Beschel, acting as Agent, assisted by maceutical Products Order] (Staatsblad A. F. de Savornin Lohman, of the 538) read together with Article 13 of the Rotterdam Bar, and the Netherlands Charges Order. The Commission has Government, represented by A. Bos, begun an investigation into this matter acting as Agent, assisted by R. Drost, but it appears at present that, even on acting as expert adviser, presented oral the supposition that such checks may be argument. authorized otherwise than by sampling, the relative charges would have to be The Advocate General delivered his considered contrary to Community law. opinion at the sitting on 29 October Although this is not a point to be settled 1980.

(c) a (parallel) importer of medicinal products established in one of the Member States imports into the Member State in which he is established the pharmaceutical products which are in circulation as described above,

do the exceptions to the rules relating to the free movement of goods within the EEC, particularly Article 36 of the EEC Treaty in so far as it relates to the protection of health and life of humans, justify the authorities of the importing Member State permitting imports of those pharmaceutical products only on payment of a registration charge, and if so, what standards should be applied to the amount and frequency of the payments and the system governing payments?"

2 That question has been raised in the context of criminal proceedings instituted against a Netherlands trader who is a "parallel importer" of phar- maceutical products in the Netherlands and who has been charged with having held for sale, or having sold, delivered or dealt in, a certain number of proprietary medicinal products within the meaning of Article 1 (1) (h) of the Netherlands Law relating to the supply of medicinal products (Wet op de Geneesmiddelenvoorziening) which had not first been registered as required by Article 3 of that Law. It is apparent from both the considerations set out in the judgment making the reference and the wording of the question that the accused did not comply with that requirement because two fees, one single and the other annual, are payable on registration, and because he considers that the requirement of registration in conjunction with the

6 On the basis of those findings of fact the Court declared that national rules or practices which make it possible for a manufacturer and his duly appointed representatives to enjoy a monopoly of the importation and marketing of a pharmaceutical product simply by refusing to produce the documents relating to the pharmaceutical product in general or to a particular consignment thereof must be regarded as being unnecessarily restrictive and cannot therefore come within the exception specified in Article 36 of the Treaty, unless it can be proved that any other rules or

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practices would obviously be beyond the means which can be reasonably expected of an administration operating in a normal manner.

7 The Court added that if a number of variants of a medicinal preparation exist which differ from one Member State to another and if those differences have a therapeutic effect there is justification for treating those variants as different medicinal preparations for the purposes of authorizing them to be placed on the market and as regards the requirement of producing the relevant documents enabling medical checks to be carried out, it being understood that for each of the authorization procedures the answer provided above remains valid if there is only a single version of the medicinal preparation.

8 After that judgment the Netherlands authorities enacted rules, namely Article 23 of the Besluit Registratie Geneesmiddelen of 8 September 1977 (Staatsblad 1977, N o 537), which provided the parallel importer of a proprietary medicinal product previously registered at the request of the manufacturer or his appointed representative with a simplified procedure for registration intended solely to ascertain whether the composition of the product which the parallel importer proposes to import is "the same" or "practically the same" as that of the product which has already been registered.

10 As the Court held in the above-mentioned De Peijper judgment, in the case of imported pharmaceutical products which have already been registered at the request of the manufacturer or the duly appointed importer, Article 36 does not prevent national authorities from checking whether the products imported in parallel are identical to those which have already been registered or, where variants of the same medicinal products are placed on the market, whether the differences between those variants have no therapeutic effect. That check must however extend only to verifying whether the products so conform and the Member State in question must have required the manufacturer or authorized importer to provide full information regarding the different forms in which the medicinal products in question are manufactured or marketed in the various Member States by either the manufacturer himself, subsidiary or related undertakings, or undertakings manufacturing such products under licence.

1 1 A monitoring procedure which is in accordance with the requirements of Article 36 is not deprived of its justification, within the meaning of that provision, by virtue of the fact that it gives rise to the collection of fees of the kind described by the national court. On the other hand such fees may not be considered compatible with the Treaty on the sole ground that they are charged in consequence of a measure adopted by a State which is justified within the meaning of Article 36. The exemption provided for in Article 36 in fact relates exclusively to quantitative restrictions on imports or exports or measures having equivalent effect. It may not be extended to customs duties or to charges having equivalent effect which, as such, fall outside the compass of Article 36.

16 The position would be different only if the pecuniary charges related to a general system of internal dues applied systematically to categories of products in accordance with objective criteria without regard to the origin of the products.

17 It is apparent from the foregoing considerations that fees of the type referred to by the national court do not display the essential features of charges having an effect equivalent to a customs duty. In fact fees demanded of a parallel importer of pharmaceutical products either in the form of a single fee on the occasion of the registration of the pharmaceutical products which he proposes to import or in the form of an annual fee charged in order to meet the costs of procedures intended to check whether the products sub- sequently marketed are identical to the registered product do not constitute such charges where those fees form part of a general system of internal fees charged both on the occasion of the registration of medicinal products produced in the Member State in question and on the occasion of the registration of medicinal products imported either directly by the manu- facturer or his appointed importer or as so-called "parallel imports" and where such fees are charged, in the case of parallel imports, in accordance with criteria identical or comparable to the criteria employed in determining the fees on domestic products.

18 Contrary to the views of the Commission, it is not the case that "each occasion on which a sufficient degree of similarity cannot be established constitutes a breach of the principle of non-discrimination laid down by

21 The papers in the case and the statements in the judgments making the reference show that both the single fee and the annual fee required for registration apply to both domestic pharmaceutical products and products from other Member States, whether imported in parallel or not. The detailed rules which are laid down for parallel imports are, however, different.

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22 It is therefore necessary to consider whether those rules are compatible with the prohibition of discrimination contained in Article 95.

23 With regard to the single fee two rules have been mentioned by the national court. The first is that the fee is reduced to 25% of the amount of the fee charged on the occasion of the first registration of the product by the national or foreign manufacturer or the appointed importer having regard to the fact that the registration in question is simplified.

24 A national system of fees which, for pharmaceutical products as a whole, draws a distinction between the amount of the fees charged on the occasion of a first registration and the amount charged on the occasion of a second registration by reason of the simplified nature of the latter is not incompatible with Article 95 of the Treaty. That provision does not require the abolition of all fees in the second case provided that, having regard to the difference in the two registrations, a reasonable proportion is maintained in fixing the amount of such fees.

25 The second rule mentioned by the national court consists in the fact that the competent authority may reduce the amount of the single fee at the request of domestic or foreign manufacturers or appointed importers but that is not possible in the case of products imported in parallel.

29 The reply to the question submitted should therefore be:

1. A monitoring procedure which is in accordance with the requirements of Article 36 is not as such deprived of its justification within the meaning of that provision by virtue of the fact that it gives rise to the collection of fees of the kind described by the national court.

2. Such fees are not justified on the sole ground that they are charged in consequence of a measure adopted by a State which is justified within the meaning of Article 36.

3. Fees demanded of a parallel importer of pharmaceutical products either in the form of a single fee on the occasion of the registration of the phar- maceutical products which he proposes to import or in the form of an annual fee charged in order to meet the costs of procedures intended to check whether the products subsequently marketed are identical to the registered product do not constitute charges having an effect equivalent to customs duties where those fees form part of a general system of internal fees charged both on the occasion of the registration of medicinal products produced in the Member State in question and on the occasion of the registration of medicinal products imported either directly by the manufacturer or his appointed importer or as what are known as parallel

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imports and where such fees are charged, in the case of parallel imports, in accordance with criteria identical or comparable to the criteria employed in determining the fees on domestic products.

1. A monitoring procedure which is in accordance with the requirements of Article 36 of the EEC Treaty is not as such deprived of its jus- tification within the meaning of that provision by virtue of the fact that it gives rise to the collection of fees of the kind described by the national court.

2. Such fees are not justified on the sole ground that they are charged in consequence of a measure adopted by the State which is justified within the meaning of Article 36 of the EEC Treaty.

OFFICIER VAN JUSTITIE v KORTMANN

Mertens de Wilmars Pescatore Mackenzie Stuart Koopmans

O'Keeffe Bosco Touffait

Delivered in open court in Luxembourg on 28 January 1981.

A. Van Houtte J. Mertens de Wilmars Registrar President